<PAGE>
As Filed with the Securities and Exchange Commission on August 4, 1997
Registration No. 333-23579
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
MML Bay State Variable Life Separate Account I
----------------------------------------------
(Exact Name of Registrant)
MML Bay State Life Insurance Company
------------------------------------
1295 State Street
Springfield, Massachusetts 01111
(Address of Principal Administrative Office)
Thomas Finnegan, Corporate Secretary
------------------------------------
1295 State Street
Springfield, Massachusetts 01111
(Name and Address of Agent for Service of Process)
GROUP FLEXIBLE PREMIUM VARIABLE LIFE
Approximate date of proposed public offering: As soon as possible after the
effective date of this Registration Statement.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
hereby declares that an indefinite amount of its securities is being registered
under the Securities Act of 1933.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date as
the Commission, acting pursuant to said section, may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Caption in Prospectus
- ----------- ---------------------
Form N-8B-2
- -----------
<S> <C>
1 Cover Page; Glossary; The Separate Account
2 Cover Page; What is MML Bay State; The
Separate Account
3 Investment of the Separate Account
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Basic Questions and Answers
About Us and Our Policy; Initial Minimum Premium
Requirements; Death Benefits
Under the Policy; Free Look Provision;
Account Value and Cash Surrender Value; Policy
Loan Privilege; The Separate Account; Charges
Under the Policy; Modal Term Premiums;
Sales and Other Agreements;
When We Pay Proceeds; Payment Options; Our
Rights; Your Voting Rights; Basic Questions
and Answers About Us and Our Policy
11 The Separate Account
12 The Separate Account; Sales and Other
Agreements
13 The Separate Account; Charges Under the Policy
14 Basic Questions and Answers About Us and Our
Policy; The Separate Account; Sales and Other
Agreements
</TABLE>
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Caption in Prospectus
- ----------- ---------------------
Form N-8B-2
- -----------
<S> <C>
15 Basic Questions and Answers About Us and Our
Policy; General Provisions of the Policy
16 The Separate Account; Investment Return
17 The Separate Account; Account Value and Cash Surrender
Value; Withdrawal Rights and Payment Options
18 The Separate Account
19 Records and Reports
20 Not Applicable
21 What is the loan privilege and how does a
loan affect the Policy's Death Benefit and
Cash Surrender Value; Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on Our Right to Challenge the Policy;
Suicide; Misstatement of Age or Sex;
Assignment; Beneficiary; Our Rights; The
Separate Account; Optional Benefits Obtainable
by Rider
25 Basic Questions and Answers About Us and Our
Policy
26 Not Applicable
27 Basic Questions and Answers About Us and
Our Policy
28 Directors and Executive Officers of MML Bay State
29 Basic Questions and Answers About Us and
Our Policy
30 Not Applicable
</TABLE>
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Caption in Prospectus
- ----------- ---------------------
Form N-8B-2
- -----------
<S> <C>
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Basic Questions and Answers About Us and
Our Policy
36 Not Applicable
37 Not Applicable
Sales and Other Agreements
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 The Separate Account; Investment Return;
Charges for Federal Income Tax; General
Provisions of the Policy
45 Not Applicable
46 The Separate Account; Investment Return
47 The Separate Account
48 The Separate Account; Investment Return
49 Not Applicable
</TABLE>
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Caption in Prospectus
- ----------- ---------------------
Form N-8B-2
- -----------
<S> <C>
50 The Separate Account
51 Cover Page; Basic Questions and Answers
About Us and Our Policy
52 The Separate Account; Your Voting Rights; Our Rights
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
</TABLE>
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
Variable Rider
to
Group Flexible Premium Adjustable Life Insurance Certificate
This prospectus describes a variable rider issued in connection with
certificates issued to individuals participating under group flexible premium
adjustable life insurance policies issued by MML Bay State Life Insurance
Company ("MML Bay State"). The group policies allow individual owners to elect
certificates offering participation in MML Bay State's fixed account and to
elect a rider to the certificate offering additional participation in a separate
account of MML Bay State. The certificates issued to individuals who also elect
the variable rider are referred to herein as "Policies" or "Policy." The Policy
provides lifetime insurance protection and has flexibility with respect to
premium payments. Payments are based upon the Selected Face Amounts chosen in
the Enrollment Form or Application. Policyowners have several investment
alternatives from which to choose. An individual Policyowner may generally
allocate the premium for his or her Policy among a Guaranteed Principal Account
("GPA") and the sixteen Separate Account divisions of a designated segment (the
"GVUL Segment") of MML Bay State Variable Life Separate Account I (the "Separate
Account") after certain deductions have been made. (For details see "Deductions
From Premiums.") At any one time, only eight divisions of the Separate Account
plus the GPA are available to a Policyowner. The GVUL Segment of the Separate
Account is divided into sixteen divisions (the "Divisions"). One division, (the
"MML Equity Index Division") invests in one fund of the MML Series Investment
Fund (the "MML Trust"); nine divisions, (the "Oppenheimer Divisions") invest in
nine funds of Oppenheimer Variable Account Funds (the "Oppenheimer Trust"); and
six divisions, (the "Panorama Divisions") invest in six series of the Panorama
Series Fund, Inc. (the "Panorama Fund").
The Death Benefit may, and Cash Surrender Value of a Policy most likely will,
vary up or down depending on the investment performance of the Divisions of the
Separate Account. While there is no guaranteed minimum Cash Surrender Value for
a Policy invested in the Separate Account, a Policy's Death Benefit will never
be less than its Selected Face Amount. The Cash Surrender Value can increase,
decrease, or remain level each year based upon the Selected Face Amount and
Death Benefit Option chosen by the Policyowner, subject to certain rules
established by MML Bay State. Furthermore, the Policy will not lapse provided
there is sufficient Account Value available to pay applicable monthly charges.
(For details see "Account Value Charges" and "Separate Account Charges.")
The Divisions have distinct investment portfolios. The MML Equity Index Division
invests in shares of MML Equity Index Fund, which invests substantially all its
assets, to the extent practicable, in the stocks that compose the Standard &
Poor's 500 Composite Stock Price Index. The Oppenheimer Money Division invests
in shares of Oppenheimer Money Fund which invests primarily in "money market"
securities consistent with low capital risk and maintenance of liquidity. The
Oppenheimer Bond Division invests in shares of Oppenheimer Bond Fund which
invests primarily in high yield fixed-income securities. The Oppenheimer
Strategic Bond Division invests in shares of Oppenheimer Strategic Bond Fund
which invests primarily in: (i) foreign government and corporate debt
securities; (ii) U.S. government securities; and (iii) lower-rated high yield,
high-risk debt securities. The Oppenheimer High Income Division invests in
shares of Oppenheimer High Income Fund which invests primarily in lower-rated,
high yield, high risk income securities. The Oppenheimer Growth & Income
Division invests in shares of Oppenheimer Growth & Income Fund which invests
primarily in equity and debt securities. The Oppenheimer Multiple Strategies
Division invests in shares of Oppenheimer Multiple Strategies Fund which invests
primarily in common stocks and other equity securities, bonds, other debt
securities and "money market securities." The Oppenheimer Growth Division
invests in shares of Oppenheimer Growth Fund which invests primarily in
securities of well-known companies. The Oppenheimer Capital
<PAGE>
Appreciation Division invests in shares of Oppenheimer Capital Appreciation Fund
which invests primarily in securities of growth-type companies. The Oppenheimer
Global Securities Division invests in shares of Oppenheimer Global Securities
Fund which invests primarily in securities of foreign issuers, growth type
companies, cyclical industries and special situations which are believed will
appreciate in value. The Panorama Total Return Division invests in shares of the
Panorama Total Return Portfolio which invests primarily in stocks, corporate
bonds, U.S. Government securities, and money market instruments. The Panorama
Growth Division invests in shares of the Panorama Growth Portfolio which invests
primarily in common stocks with low price-earnings ratios and better than
anticipated earnings. The Panorama International Equity Division invests in
shares of the Panorama International Equity Portfolio which invests primarily in
equity securities of companies based outside of the United States. The Panorama
LifeSpan Capital Appreciation Division invests in shares of the Panorama
LifeSpan Capital Appreciation Portfolio which invests in a strategically
allocated portfolio consisting primarily of equity securities. The Panorama
LifeSpan Balanced Division invests in shares of the Panorama LifeSpan Balanced
Portfolio which invests in a strategically allocated portfolio of equity
securities and fixed income securities with a slightly stronger focus on equity
securities. The Panorama LifeSpan Diversified Income Division invests in shares
of the Panorama LifeSpan Diversified Income Portfolio which invests in a
strategically allocated portfolio with a focus on fixed income securities.
(Collectively, these sixteen funds are referred to as the "Funds.") The shares
of the underlying Funds purchased by the Divisions are held by MML Bay State as
custodian of the Separate Account. (For details regarding the charges against
the Separate Account, see "Separate Account Charges.")
All Policies are serviced through MML Bay State's Principal Administrative
Office which is located in Springfield, Massachusetts. The mailing address is
MML Bay State Life Insurance Company, Springfield, Massachusetts 01111. The
telephone number is (413) 788-8411.
SUBJECT TO COMPLETION - JULY 31, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALES OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE PROSPECTUSES OF THE MML
EQUITY INDEX FUND, OPPENHEIMER VARIABLE ACCOUNT FUNDS, AND PANORAMA SERIES FUND,
INC.
<PAGE>
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FURTHER REFERENCE.
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO
OR COMPARABLE TO A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR SOLICITATION OF AN OFFER TO
ACQUIRE, ANY INTEREST OR PARTICIPATION IN THE VARIABLE RIDER TO GROUP FLEXIBLE
PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE OFFERED BY THIS PROSPECTUS IN ANY
JURISDICTION TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION IN SUCH JURISDICTION.
<PAGE>
Table Of Contents Page
- ----------------- ----
Definitions Of Terms
Basic Questions And Answers About Us And Our Policy
What is MML Bay State?
What variable life insurance policy are We offering?
Availability
Initial Minimum Premium Requirements
Underwriting
What is the Account Value of the Policy?
What are the Divisions of the Separate Account?
What is the Guaranteed Principal Account ("GPA")?
Is the level of the Death Benefit guaranteed?
Is the Death Benefit subject to income taxes?
Does the Policy have a Cash Surrender Value?
What is a modified endowment contract?
Can this Policy become a modified endowment contract?
What about Premiums?
When are Initial Premiums allocated to the Guaranteed
Principal Account or the Separate Account?
How can the Net Premium and the Account Value of the
Policy be allocated among the Guaranteed Principal
Account and the Separate Account Divisions?
How long will the Policy remain in force?
Are there charges against the Policy?
What is the loan privilege and how does a loan affect the Policy's Death
Benefit and Cash Surrender Value?
Do I have a right to cancel?
Charges Under The Policy
Deductions from Premiums
Sales Load
State Premium Tax Charge
Deferred Acquisition Cost ("DAC") Tax Charge
Account Value Charges
Administrative Charge
Charge for Cost of Insurance Protection
Separate Account Charges
Charges for Mortality and Expense Risks
Charges for Federal Income Taxes
Fund Charges
The Separate Account
Investment of the Separate Account
Investment Objectives
Rates of Return
<PAGE>
Table Of Contents Page
- ----------------- ----
General Provisions Of The Policy
Premiums
Planned Policy Premiums - Modal Term Premiums
Minimum and Maximum Premium Payments
Termination
Grace Period
Death Benefit Under The Policy
Account Value And Cash Surrender Value
Account Value
Transfers
Automated Account Re-Balancing
Investment Return
Cash Surrender Value
Withdrawals
Policy Loan Privilege
Source of Loan
If Loans Exceed the Policy Account Value
Interest
Repayment
Interest on Loaned Value
Effect of Loan
Free Look Provision
Exchange Privilege
Your Voting Rights
Our Rights
Directors And Principal Officers Of MML Bay State
The Guaranteed Principal Account
Federal Income Tax Considerations
MML Bay State - Tax Status
Policy Proceeds, Premiums, and Loans
Modified Endowment Contracts
Diversification Standards
Additional Provisions Of The Policy
Paid-up Policy Date
Reinstatement Option
<PAGE>
Table Of Contents Page
- ----------------- ----
Payment Options
Fixed Amount Payment Option
Fixed Time Payment Option
Interest Payment Option
Lifetime Payment Option
Joint Lifetime Payment Option
Joint Lifetime Payment Option with Reduced Payments
Withdrawal Rights under Payment Options
Beneficiary
Changing the Policyowner or Beneficiary
Right to Substitute Insured
Assignment
Limits on Our Right to Challenge the Policy
Misstatement of Age or Sex
Suicide
When We Pay Proceeds
Optional Benefits Obtainable By Rider
Waiver of Monthly Charges Rider
Accelerated Benefits Rider
Accidental Death and Dismemberment Rider
Records And Reports
Sales And Other Agreements
Commissions Schedule
Bonding Arrangement
Legal Proceedings
Experts
Financial Statements
Appendix A
Appendix B
<PAGE>
DEFINITION OF TERMS
Account Value: The sum of the Variable Account Value and the Fixed Account Value
- -------------
of the Policy.
Application: The form used to apply for an increase in the Selected Face
- -----------
Amount of the Policy after the Policyowner ceases to be associated with an
Employer. Enrollment Forms are used to apply for the initial Selected Face
Amount and any subsequent increases when the Policyowner remains associated with
the Employer. A supplement to the Application is used to apply for the variable
rider.
Beneficiary: The person or persons that the Policyowner specifies to Us in
- -----------
writing to receive insurance proceeds after the Insured dies.
Cash Surrender Value: The amount payable to a Policyowner upon Surrender of the
- --------------------
Policy. It is equal to the Account Value less any Policy Debt.
Certificate: A document issued by Us under a group flexible premium adjustable
- -----------
life insurance contract to Certificate owners, setting forth or summarizing the
Certificate owner's rights and benefits.
Death Benefit: The amount payable to the named Beneficiary when the Insured
- -------------
dies. A choice of Death Benefits is available under the Policy (referred to as
"Option A" and "Option B"). The Death Benefit under Option A equals the greater
of the Selected Face Amount or the Minimum Face Amount in effect on the date of
death, with possible additions and deductions. The Death Benefit under Option B
equals the greater of the Selected Face Amount plus the Account Value or the
Minimum Face Amount in effect on the date of death, with possible additions and
deductions. Possible additions include the portion of the Monthly Deduction
attributable to death benefit coverage after the Insured's death. Possible
deductions include Policy Debt and unpaid Monthly Deductions.
Divisions: The subaccounts of the Separate Account, each of which invests in
- ---------
shares of the MML Series Investment Fund (the "MML Trust"), the Oppenheimer
Variable Account Funds (the "Oppenheimer Trust"), or the Panorama Series Fund,
Inc. (the "Panorama Fund").
Employee: A person who is associated with an Employer and the spouse of such
- --------
person.
Employer: The employer, association, sponsoring organization or trust which has
- --------
executed a Participation Agreement electing participation in a Group Contract.
Enrollment Form: A document used by potential Certificate owners to apply for
- ---------------
the Certificates and to apply for an increase in the Selected Face Amount of the
Certificate when the Certificate owner is associated with an Employer.
Fixed Account Value: The Account Value which is allocated to the GPA.
- -------------------
Free Look Period: The period during which a Certificate owner may return the
- ----------------
Certificate. It must be within 10 days of receipt of the Certificate (unless a
different period is mandated under applicable state law). If You have added the
variable rider to the Certificate prior to the expiration of Your Certificate's
Free Look Period, amounts will be held in the Guaranteed Principal Account until
the period's expiration.
<PAGE>
Group Contract: A group flexible premium adjustable life insurance contract in
- --------------
which the Employer elects to participate and which is issued by MML Bay State.
Guaranteed Principal Account ("GPA"): A fixed account to which a Policyowner may
- ------------------------------------
allocate Net Premium or Account Value, which guarantees both the principal and a
minimum interest rate. The GPA is part of Our General Account and its investment
performance has no bearing upon the investment performance of the Separate
Account.
Insured: Person whose life the Policy insures.
- -------
Issue Age: The Insured's Age at his or her last birthday as of the date the
- ---------
Certificate is issued.
Issue Date: The date shown on the Policy schedule page. It is the start date of
- ----------
the suicide and contestability periods. It is also the date from which the
Certificate is in force if the first premium has been paid.
Minimum Face Amount: An amount equal to Account Value times the applicable
- -------------------
Minimum Face Amount percentage. This percentage depends upon the Insured's age.
The Minimum Face Amount in any event may not be less than $50,000.
Modal Term: A period selected by the Employer for which Modal Term Premiums will
- ----------
be paid in advance by the Employer. This period may be monthly, quarterly, semi-
annual or annual. Your Modal Term is specified in Your Policy schedule page.
Modal Term Premium: The estimated premium amount sufficient to pay the Premium
- ------------------
Deduction and Monthly Deduction(s) under the Policy during one Modal Term. For
example, if a Policy has a monthly Modal Term, the Modal Term Premium would be
one estimated Monthly Deduction plus one estimated Premium Deduction. If a
Policy maintains a yearly Modal Term, the Modal Term Premium would be twelve
estimated Monthly Deductions plus one estimated Premium Deduction. The Monthly
Deduction necessary under any Policy varies by initial Selected Face Amount,
issue age, underwriting classification, and rider(s) selected.
Monthly Calculation Date: The monthly date on which the Monthly Deductions under
- ------------------------
the Policy are generally deducted from the Account Value. The first Monthly
Calculation Date will be the Policy Date, and subsequent Monthly Deductions will
be on the same date of each succeeding calendar month. Monthly Deductions from
Your Policy are made on the Monthly Calculation Date. However, if the Monthly
Calculation Date does not fall on a Valuation Date, the Monthly Deduction will
occur on the next succeeding Valuation Date. Monthly Deductions will occur on a
date other than the Monthly Calculation Date when: 1) We receive the initial
premium for Your Certificate; and 2) We receive a premium amount sufficient to
prevent termination of the Policy in accordance with the Grace Period and
Termination provisions of the Policy. (See "Grace Period" and "Termination.")
All Policies issued to the same group are generally aggregated for purposes of
maintaining the same monthly date. The Policies are Certificates to which
variable account riders have been added. Therefore, the monthly calculation date
and policy date remain the same in Your Certificate even after You have elected
the variable account rider.
Monthly Deduction: The deductions from the Account Value under the Policy which
- -----------------
are generally deducted on the Monthly Calculation Date. The deductions are equal
to the sum of the charge for cost of
<PAGE>
insurance protection, plus the Administrative Charge, plus a charge for the cost
of any additional benefits provided by rider.
Net Premium: Premium paid less sales load, state premium tax charges and
- -----------
deferred acquisition cost tax charges.
Paid-up Policy Date: The Policy Anniversary Date succeeding the Insured's 100th
- -------------------
birthday.
Participation Agreement: An agreement executed by the Employer requesting
- -----------------------
participation in a Group Contract issued by MML Bay State.
Policy: The Certificate, as amended by the variable rider, offered by MML Bay
- ------
State and described in this Prospectus.
Policy Anniversary: The anniversary of the Policy Date.
- ------------------
Policy Date: The date shown on the Policy schedule page used as the starting
- -----------
point for determining Policy Anniversary Dates, Policy Years and Monthly
Calculation Dates. The Policies are Certificates to which variable account
riders have been added. Therefore, the policy dates, anniversary dates, policy
years, and monthly calculation dates remain the same in Your Policy even after
You have elected the variable account rider.
Policy Debt: The amount of obligation from a Policyowner to MML Bay State from
- -----------
outstanding loans made to the Policyowner under the Policy. This amount includes
any loan interest accrued to date.
Policy Year: The twelve month period commencing with the Policy Date, and each
- -----------
successive twelve month period thereafter.
Policyowner: The owner of a Policy, as designated in the Enrollment Form or
- -----------
Application, or as subsequently changed.
Premium: The payment that may be paid to Us to purchase life insurance and to
- -------
increase the Account Value of the Policy.
Premium Deduction: The deductions We make from premiums prior to the allocation
- -----------------
of such premiums to the GPA or the selected Divisions. The deductions are equal
to the sum of the charges for sales load, state premium tax, and deferred
acquisition ("DAC") tax.
Premium Tax: The amount of premium tax, if any, charged by a state or other
- -----------
governmental authority.
Principal Administrative Office: The Principal Administrative Office of MML Bay
- -------------------------------
State is located at 1295 State Street in Springfield, Massachusetts.
Selected Face Amount: The amount of insurance coverage chosen by the
- --------------------
Policyowner.
Separate Account: The segregated asset account called "MML Bay State Variable
- ----------------
Life Separate Account I" established by MML Bay State under the laws of Missouri
and maintained under the laws of Connecticut and registered as a unit investment
trust under the Investment Company Act of 1940, as amended. The
<PAGE>
Separate Account will be used to receive and invest premiums for this Policy and
for other variable life insurance policies MML Bay State issues. For each class
of policy there will be a designated segment of the Separate Account.
Surrender: A surrender by the Policyowner of all rights under the Policy while
- ---------
the Policy is in force in exchange for the entire Account Value minus any Policy
Debt under the Policy.
Valuation Date: Any date on which the net asset value of the shares of the Funds
- --------------
is determined. Generally, this will be any date on which the New York Stock
Exchange (or its successor) is open for trading.
Valuation Period: The period of time from the end of one Valuation Date to the
- ----------------
end of the next Valuation Date.
Valuation Time: The time the New York Stock Exchange (or its successor) closes
- --------------
on a Valuation Date (currently 4:00 p.m. New York time). All actions which are
to be performed on a Valuation Date will be performed as of the Valuation Time.
Variable Account Values: Account Values which are allocated to any of the
- -----------------------
Divisions of the GVUL Segment of the Separate Account.
We, Us, or Our: Refers to MML Bay State Life Insurance Company.
- --------------
Withdrawal: A withdrawal of Account Value by the Policyowner.
- ----------
You or Yours: Refers to the Policyowner.
- ------------
<PAGE>
BASIC QUESTIONS AND ANSWERS ABOUT US AND OUR POLICY
What is MML Bay State? MML Bay State Life Insurance Company ("MML Bay State" or
- ----------------------
the "Company") is a life insurance company incorporated under the laws of the
State of Connecticut. The Company was previously incorporated under the laws of
Missouri from 1894 to 1997. In June 1997, MML Bay State re-domesticated from
Missouri to Connecticut and became a Connecticut corporation. It is currently
licensed to transact life, accident, and health insurance business in the
District of Columbia, and all states except New York. In addition to the Policy
described in this Prospectus, MML Bay State offers other life insurance products
and variable annuity contracts.
MML Bay State is a wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company ("MassMutual"), a mutual life insurance company chartered in
Massachusetts in 1851. MassMutual's home office is located in Springfield,
Massachusetts. It is authorized to do business in all states and the District of
Columbia. MassMutual serves as investment adviser to the MML Trust. On February
29, 1996, Connecticut Mutual Life Insurance Company ("Connecticut Mutual")
merged with and into MassMutual. As a result, the separate existence of
Connecticut Mutual ceased and MassMutual continued its corporate existence under
its current name. As of December 31, 1996, MassMutual had estimated statutory
assets in excess of $55 billion, and estimated total assets under management in
excess of $130 billion.
What variable life insurance policy are We offering? In this Prospectus We are
- ---------------------------------------------------
offering a variable account rider to a Certificate (the "Policy") which provides
the Policyowner the opportunity to allocate Account Value to the Separate
Account. The Policy is evidence of individual insurance containing a variable
accumulation option. We issue the Policy to provide for a Death Benefit and Cash
Surrender Value, as well as loan privileges and flexible premiums. The
Policyowner may select the timing and amount of premium payments. The Policy is
considered "variable" because, unlike the fixed benefits of a traditional whole
life policy, the Death Benefit may, and Cash Surrender Value most likely will,
vary to the extent that the Account Value under the Policy is allocated to the
Division(s). Certain provisions of the Policy as described herein may be
somewhat different in any particular state because of specific state
requirements.
The Policy evidences a legal contract between the Employer, Policyowner and MML
Bay State. The entire contract consists of the Group Contract, the Enrollment
Form, the Application, the Policy and any amendments, supplements, or riders
added thereto. In the event of a conflict between the contract, as evidenced by
the aforementioned documents, and this prospectus, the terms of the contract
shall apply.
Availability. The variable rider may only be elected by Certificate owners. The
- ------------
Certificates are only available to individuals who are members of a group
acceptable to MML Bay State where the group sponsor such as an employer,
association, sponsoring organization or trust executes a Participation Agreement
requesting participation in a Group Contract issued by MML Bay State. Each
individual in a group accepted by MML Bay State is aggregated for purposes of
determining Issue Dates, Policy Dates, underwriting classification, and sales
load percentages. The Group Contract and the Participation Agreement specify the
rights and privileges of the group sponsor ("Employer"). The Policy is evidence
of coverage under the Group Contract and Individuals may exercise all rights and
privileges under the Policy through the Employer. After termination of the
employment or other relationship, an individual who has been issued the Policy
may exercise all rights and privileges directly with MML Bay State.
<PAGE>
Initial Minimum Premium Requirements. The minimum initial premium for the
- ------------------------------------
variable rider to Your Certificate is a $500 lump sum premium payment. Your
election of the variable rider activates the minimum premium requirement.
Underwriting. MML Bay State does not require underwriting prior to issuance of
- ------------
the variable rider. However, before issuing any Certificate We will require
satisfactory evidence of insurability, except under a guaranteed issue
underwriting approach. (For details see "Death Benefit Under The Policy.")
What is the Account Value of the Policy? The Account Value is determined by the
- ----------------------------------------
amount and frequency of premium payments, the investment experience of the
Divisions chosen by the Policyowner (the Variable Account Value), the interest
earned on Account Value allocated to the GPA (the Fixed Account Value), and any
Withdrawals or charges imposed in connection with the Policy. The Policyowner
bears the investment risk of any reduction in value of the underlying assets of
the Divisions but also may benefit from any appreciation in value. (For details
see "Account Value.")
What are the Divisions of the Separate Account? The Separate Account has sixteen
- -----------------------------------------------
Divisions: the MML Equity Index Division, the Oppenheimer Money Division, the
Oppenheimer Bond Division, the Oppenheimer Strategic Bond Division, the
Oppenheimer High Income Division, the Oppenheimer Growth & Income Division, the
Oppenheimer Multiple Strategies Division, the Oppenheimer Growth Division, the
Oppenheimer Capital Appreciation Division, the Oppenheimer Global Division, the
Panorama Total Return Division, the Panorama Growth Division, the Panorama
International Equity Division, the Panorama LifeSpan Capital Appreciation
Division, the Panorama LifeSpan Balanced Division, and the Panorama LifeSpan
Diversified Income Division. Each Division invests only in shares of a single
investment company or a single series of an investment company. The Divisions
are intended to provide money to pay benefits under the Policy but do not
guarantee a minimum interest rate or guarantee against asset depreciation. (For
details see "The Separate Account.")
What is the Guaranteed Principal Account ("GPA")? As an alternative to the
- -------------------------------------------------
Separate Account, the Policyowner may allocate Net Premium or transfer Account
Value to the GPA. Amounts so allocated or transferred become part of MML Bay
State's general account assets. The Policyowner is not entitled to share in the
investment experience of those assets. Rather, MML Bay State guarantees a rate
of return on the allocated amount equal to 3%. Although MML Bay State is not
obligated to credit interest at a rate higher than this minimum, it may declare
a higher rate applicable for such periods as it deems appropriate. (For details
see "The Guaranteed Principal Account.")
Is the level of the Death Benefit guaranteed? There are two Death Benefit
- ---------------------------------------------
options - Death Benefit Option A and Death Benefit Option B. The Death Benefit
equals the greater of the Policy's Selected Face Amount for the Policy Year of
death (plus the Account Value on the date of death if Death Benefit Option B is
elected) or the Minimum Face Amount in effect on the date of death of the
Insured. Death Benefit proceeds under either Option will be reduced by any
outstanding Policy Debt and unpaid Monthly Deductions and increased by the
portion of the Monthly Deduction attributable to death benefit coverage after
the Insured's death. So long as the Policy remains in force, the Death Benefit
You have selected will be available. (For details see "Death Benefit Under The
Policy.")
Is the Death Benefit subject to income taxes? A Death Benefit paid under our
- ---------------------------------------------
Policies is usually fully excludable from the gross income of the Beneficiary
for federal income tax purposes. (For details see "Federal Income Tax
Considerations" - "Policy Proceeds, Premiums and Loans.")
<PAGE>
Does the Policy have a Cash Surrender Value? The Policyowner may surrender the
- --------------------------------------------
Policy at any time and receive its Account Value less any Policy Debt. There is
no surrender charge on full surrenders. Partial withdrawals are allowed subject
to certain restrictions and are subject to a withdrawal charge of the lesser of
2% of the Account Value or $25.00 which is deducted from each Withdrawal. (For
details see "Withdrawals.") The Cash Surrender Value of a Policy fluctuates with
the investment performance of the Divisions in which the Policy has Account
Value, and with the interest rate on the amount held in the GPA. It may increase
or decrease daily. For federal income tax purposes, the Policyowner usually is
not taxed on increases in the Cash Surrender Value until the Policy is
surrendered. In connection with certain Withdrawals of Account Value and loans
on the Policy, however, the Policyowner may be taxed on all or a part of the
amount distributed. (For details see "Cash Surrender Value" and "Federal Income
Tax Considerations" - "Policy Proceeds, Premiums and Loans.")
What is a modified endowment contract? A modified endowment contract (as defined
- --------------------------------------
by the Internal Revenue Code) is a life insurance policy under which the
premiums paid during the first seven contract years exceed the cumulative
premiums payable under a policy providing for guaranteed benefits upon the
payment of seven level annual premiums. Certain changes to a life insurance
policy can subject it to re-testing for a new seven-year period. During an
insured's lifetime, distributions from a modified endowment contract, including
collateral assignments, loans, and withdrawals, are taxable to the extent of any
income in the contract and may also incur a penalty tax if the Policyowner is
not 59-1/2. (For details see "Modified Endowment Contracts.")
Can this Policy become a modified endowment contract? Since this Policy permits
- -----------------------------------------------------
flexible premium payments, it may become a modified endowment contract. The
Company has the systems capacity to test a Policy at issue to determine whether
it will be classified as a modified endowment contract ("MEC"). This test
examines the Policy for MEC status at the time of issue. The Company has further
safeguards in place to monitor whether a Policy may become a modified endowment
contract after issue. (For details see "Federal Income Tax Considerations" -
"Modified Endowment Contracts.")
What about Premiums? The minimum initial premium for the variable rider to the
- --------------------
Certificate is $500 which must be paid by You in a lump sum. Since the Policy is
a "flexible premium policy" You may choose to pay more or less than the planned
premium.
Your Employer is not required to pay a minimum initial premium for Your Policy.
However, the Employer must pay the estimated premium amount sufficient to pay
the Premium Deduction and Monthly Deduction(s) under Your Policy for the term
selected by Your Employer. The term selected by Your Employer can be one month,
one quarter, or semi-annual or annual and is called a Modal Term. Your Modal
Term is specified in Your Policy's schedule page. The premium paid for the Modal
Term is called a Modal Term Premium. The Modal Term Premium for a Policy is
based upon its cost of insurance rates, Sales Load, State Premium Tax Charge,
DAC Tax Charge, and the Administrative Charge. The method of calculating the
Modal Term Premium is shown in Appendix B. The planned Employer paid premium is
the Modal Term Premium for Your Policy.
Once the Policy is in force, the Modal Term selected by the Employer becomes the
basis for the Policy's premium billing. We will forward billing statements to
the Employer for each Modal Term. The Employer may change the Modal Term at any
time upon written request; however, it may not be changed to a term of less than
one month.
Once the Policyowner leaves his or her association with the Employer,
the Policyowner may choose to continue the Policy. If the Policyowner chooses to
continue the Policy, all of the rights and obligations
<PAGE>
previously held by the Employer will be vested in the Policyowner. In this
event, MML Bay State will discontinue billing for Your Modal Term premium. (For
details see "General Provisions Of The Policy" - "Premiums.")
When are Initial Premiums allocated to the Guaranteed Principal Account or the
- ------------------------------------------------------------------------------
Separate Account? If Your Certificate has an unexpired Free Look Period at the
- -----------------
time You elect the variable account rider, the initial Net Premium (i.e.,
premium paid less the Premium Deduction) will be initially allocated to the
Guaranteed Principal Account during the Free Look Period (see "Free Look
Provision"). At the end of the Free Look Period, the Net Premium paid by You is
allocated to the GPA and/or Divisions according to Your instructions in the
Application and subject to MML Bay State's then current allocation rules. Billed
Modal Term Premiums are always initially allocated to the GPA.
How can the Net Premium and the Account Value of the Policy be allocated among
- ------------------------------------------------------------------------------
the Guaranteed Principal Account and the Divisions? Premiums paid by You under
- ---------------------------------------------------
the Policy may be allocated to the Divisions (maximum of eight at one time) and
the GPA. You choose the percentages of Your premiums to be allocated to the
Divisions and/or the GPA when You elect the variable rider to Your Certificate.
A Policyowner may choose any whole-number percentages as long as the total is
100%. The allocation of future Net Premiums may be changed at any time without
charge. Billed Modal Term Premiums payable by Your Employer are always allocated
to the GPA. Transfers from the GPA are subject to certain restrictions. (For
details see "Transfers.")
The Account Value of the Policy may be transferred between the GPA and/or the
Divisions by written request. Account Value may be transferred by dollar amount
or by whole-number percentage, subject to restrictions. Only eight Divisions
plus the GPA are available to a Policyowner at any one time. To allocate Net
Premiums or to transfer Account Value to a ninth Division, the Policyowner must
transfer 100% of the Account Value from one or more of the eight Divisions to
which allocations are currently made. Transfers from the GPA are also subject to
certain restrictions. (For details see "The Separate Account" and "Account Value
and Cash Surrender Value -Account Value.") Automated Account Re-Balancing and
Automated Account Value Transfer is also available. (For details see "Automated
Account Re-Balancing" and "Automated Account Value Transfer.")
How long will the Policy remain in force? The Policy does not automatically
- -----------------------------------------
terminate for failure of the Employer or You to pay planned Policy premiums or
Modal Term Premiums. Conversely, payment of these amounts does not guarantee the
Policy will remain in force. The Policy terminates only when the Account Value
less any Policy Debt is insufficient to pay the Monthly Deduction, and a grace
period expires without sufficient payment. (For details see "Termination and
Grace Period.")
Are there charges against the Policy? Certain charges are made against the
- -------------------------------------
Policy. Before allocation of any premium to the Account Value, a percentage of
each premium paid is deducted for expenses related to the sale and distribution
of the Policies. These charges are called sales loads and the percentages may
vary depending on group enrollment procedures selected by the Employer, total
group premium paid by the Employer, the size of the Employer group, and other
factors. This charge is specified on the schedule page to your Policy and is
computed as a percentage of premiums paid by either You or the Employer. The
charge is guaranteed not to exceed 5% of premiums. Once the charge is set, it
will never change for any of the Policies issued to individuals under the same
group.
There are two additional deductions from gross premiums: (1) for state premium
taxes; and (2) for Deferred Acquisition Cost ("DAC") tax expense. Each premium,
net of these charges, is allocated to the
<PAGE>
GPA or the Divisions and becomes a part of the Account Value. (For details see
"Deductions From Premium.")
Certain monthly charges are generally deducted directly from the Policy's
Account Value on each Monthly Calculation Date. These Monthly Deductions are
equal to the sum of a charge for cost of insurance protection, the
Administrative Charge, and a charge for the cost of any additional benefits
provided by rider.
Some deductions are made on a daily basis against the assets of the Divisions. A
daily charge calculated at a current annual rate of 0.75% of the value of the
assets of each Division is charged for mortality and expense risks. In no event
will this rate exceed 1.00%. Similarly, tax assessments are calculated daily.
Currently, We are not making any charges for income taxes, but We may make
charges in the future against the Divisions for federal income taxes
attributable to them.
Withdrawals of Account Value are permitted subject to certain restrictions. A
charge equal to the lesser of $25 or 2% of the amount withdrawn is imposed for
each Withdrawal.
(For details see "Charges Under The Policy" and "Federal Income Tax
Considerations.")
What is the loan privilege and how does a loan affect the Policy's Death Benefit
- --------------------------------------------------------------------------------
and Cash Surrender Value? While the Policy is in force, a loan may be made on
- -------------------------
the Policy, in a maximum amount equal to: 1) 90% of Your Account Value at the
time of the loan; less 2) any outstanding Policy Debt before the new loan; less
3) interest on the loan being made and on other outstanding loan(s) to Your next
Policy Anniversary Date; less 4) an amount equal to one plus the number of
Monthly Calculation Dates remaining in Your Modal Term multiplied by Your most
recent Monthly Deduction. (The maximum loan amount may be different if required
by state law.) (For details see "Policy Loan Privilege.")
Do I have a right to cancel? Under the Free Look Provision, the owner of a
- ----------------------------
Certificate has a limited right to return the Certificate and receive a refund.
This right expires ten days after You receive the Certificate (or a longer
period if required by state law). The Certificate may be returned to Our
Principal Administrative Office, to any of Our agency offices, or to the agent
who sold You the Certificate. Your Policy is a Certificate to which a variable
account rider has been added. Therefore, Your election of the rider does not
affect the duration of the Certificate's Free Look Period. (For details see
"Free Look Provision.")
CHARGES UNDER THE POLICY
Certain charges are deducted to compensate MML Bay State for providing the
insurance benefits under the Policy, for administering the Policy, for assuming
certain risks, and for incurring certain expenses in distributing the Policy.
DEDUCTIONS FROM PREMIUMS
Prior to the allocation of the premium payment to the GPA or the selected
Divisions, a deduction as a percentage of premium is made for the sales load,
state premium taxes, and the DAC tax expense ("Premium Deduction").
Sales Load. The sales load component of the premium varies for each Employer
- ----------
group depending on group enrollment procedures selected by the Employer, total
group premium paid by the Employer, the size
<PAGE>
of the Employer group, and other factors. The sales load is generally 0.75% of
premiums and is guaranteed not to exceed 5% of premiums. All Policies within an
Employer group will have the same sales load expressed as a percentage of
premiums paid. The charge applies to premiums paid under the Policy by either
You or Your Employer. Once the charge is set, it will never change for any of
the Policies issued to individuals under the same group. The sales load
percentage appears on your Policy schedule page. There are no back-end surrender
charges or contingent deferred sales loads applicable to the Policies.
The amount of the sales load in a Policy Year is not necessarily related to our
actual sales expenses for that particular year. To the extent that sales
expenses are not covered by the sales load, they will be recovered from MML Bay
State surplus, including any amounts derived from the mortality and expense risk
charge or the cost of insurance charge. (For a discussion of the commissions
paid under the Policy, see "Sales And Other Agreements - Commission Schedule.")
State Premium Tax Charge. Various states apply premium taxes at various rates.
- ------------------------
We currently deduct a percentage equal to the applicable state rate of each
premium to cover premium taxes assessed against MML Bay State by the various
states. The current state premium tax charge ranges from 1.75% to 4% of each
premium. This charge may increase or decrease to reflect either any change in
the tax or changes of residence. The Policyowner should notify MML Bay State of
any change of residence. Any change in this charge would be effective
immediately.
Deferred Acquisition Cost ("DAC") Tax Charge. We currently deduct 0.25% of each
- --------------------------------------------
premium to cover a federal premium tax assessed against MML Bay State. This
charge relates to MML Bay State's federal income tax burden, under Internal
Revenue Code Section 848, resulting from the receipt of premiums. This charge
may be increased or decreased by Us.
ACCOUNT VALUE CHARGES
A monthly Administrative Charge and a cost of insurance charge are generally
deducted from the Fixed Account Value on each Monthly Calculation Date. If the
Fixed Account Value is less than the Administrative Charge and cost of insurance
charge, then the deficiency is deducted from the Variable Account Value.
Administrative Charge. A monthly fee is deducted to compensate MML Bay State for
- ---------------------
costs incurred in providing certain administrative services including premium
collection, record keeping, processing claims, and communicating with
Policyowners. Currently, the charge is $5.25 per month for each Policy. While
this charge may increase or decrease, the maximum monthly Administrative Charge
is $9 per month. (The maximum charge may be different if required by state law.)
We deduct this charge from Your Policy's Fixed Account Value each month. If
there are insufficient Fixed Account Values to pay the charge, We will deduct
the deficiency from Your Policy's Variable Account Value pro rata according to
Your Variable Account Value in the Divisions.
Charge for Cost of Insurance Protection. A charge for the cost of insurance
- ---------------------------------------
protection (also called a Mortality Charge in the Policy) is generally deducted
on each Monthly Calculation Date and is based on the Insured's age and group
rating. We deduct this charge from Your Policy's Fixed Account Value. If there
are insufficient Fixed Account Values to pay the charge, We will deduct the
deficiency from Your Policy's Variable Account Value pro rata according to Your
Variable Account Value in the Divisions. The charge varies monthly because it is
determined by multiplying the applicable cost of insurance rates by the amount
at risk each Policy month. The maximum monthly cost of insurance charge for each
$1,000 of insurance protection provided is shown in the Table of Maximum Monthly
Mortality Charges in the Policy. MML
<PAGE>
Bay State may charge less than these maximum charges. Any change in these
charges will apply to all Policies in the same group and class.
SEPARATE ACCOUNT CHARGES
Charges for Mortality and Expense Risks. We charge the Divisions for the
- ---------------------------------------
mortality and expense risks We assume. We deduct a daily charge at a current
effective annual rate of 0.75% of the value of each Division's assets that come
from the Policy. While this charge may increase or decrease, the maximum charge
is 1.00% annually. The charges are deducted daily and paid quarterly against the
Separate Account divisions.
The mortality risk We assume is that the group of lives insured under our
Policies may, on average, live for shorter periods of time than We estimated.
The expense risk We assume is that our costs of issuing and administering
Policies may be more than We estimated.
If all the money We collect from this charge is not needed to cover Death
Benefits and expenses, it will be our gain and will be used for any proper
purpose, including payment of sales commissions. Conversely, even if the money
We collect is insufficient, We will provide for all Death Benefits and expenses.
Charges for Federal Income Taxes. We do not currently make any charge against
- --------------------------------
the Divisions for federal income taxes attributable to them. We may make such a
charge eventually, however, in order to provide for the future federal income
tax liability of the Divisions. (For more information on charges for federal
income taxes, see "Federal Income Tax Considerations" - "MML Bay State" - "Tax
Status.")
Fund Charges. MassMutual serves as investment manager of the MML Equity Index
- ------------
Fund pursuant to an investment management agreement which provides for the Fund
to pay MassMutual a quarterly fee at the annual rate of 0.40% of the first $100
million of net assets, 0.38% of the next $150 million, and 0.36% of net assets
in excess of $250 million. MassMutual has entered into a sub-advisery agreement
with Mellon Equity Associates ("Mellon Equity"), an indirect wholly owned
subsidiary of Mellon Bank Corporation, whereby Mellon Equity manages the
investment and reinvestment of the assets of the MML Equity Index Fund as sub-
adviser to the Fund. For providing its services under the sub-advisery agreement
with MassMutual, Mellon Equity will receive a monthly fee, computed daily at an
annual rate based on the collective daily net asset value of the MML Equity
Index Fund. The annual fee paid to Mellon Equity is as follows: 0.09% for the
first $100 million of net assets, 0.07% of the next $150 million of net assets,
and 0.05% of net assets over $250 million. No fees were paid to either
MassMutual or Mellon Equity by the MML Equity Index Fund during 1996 because the
Fund did not commence operations until 1997.
OppenheimerFunds, Inc. ("OFI") serves as investment manager of each of the
Oppenheimer Funds pursuant to Investment Management Agreements, each of which
provides for the Oppenheimer Fund to pay OFI a monthly management fee computed
separately on the net assets of each Fund as of the close of business each day.
The management fee rates are as follows: (i) for Money Fund: 0.450% of the first
$500 million of net assets, 0.425% of the next $500 million, 0.400% of the next
$500 million, and 0.375% of net assets over $1.5 billion; (ii) for Capital
Appreciation Fund, Growth Fund, Growth & Income Fund, Multiple Strategies Fund,
and Global Securities Fund: 0.75% of the first $200 million of net assets, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of net assets over $800 million; and (iii) for High Income
Fund, Bond Fund, and Strategic Bond Fund: 0.75% of the first $200 million of net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of
the next $200 million, 0.60% of the next $200 million, and 0.50% of net assets
over $1 billion. During 1996, OFI earned investment management fees of $445,899
from the Money Fund, $3,382,840 from the Capital Appreciation Fund,
<PAGE>
$1,139,255 from the Growth Fund, $160,819 from the Growth & Income Fund,
$3,132,569 from the Multiple Strategies Fund, $3,395,740 from the Global
Securities Fund, $1,177,754 from the High Income Fund, $2,188,350 from the Bond
Fund, and $618,338 from the Strategic Bond Fund.
OFI also serves as investment manager of each of the Portfolios of the Panorama
Fund pursuant to Investment Management Agreements, each of which provides for
the Portfolio to pay OFI a monthly management fee computed separately on the net
assets of each Fund as of the close of business each day. The management fee
rates are as follows: (i) for the Total Return Portfolio: 0.625% of the first
$600 million of net assets, 0.45% of net assets over $600 million; and (ii) for
the Growth Portfolio: 0.625% of the first $300 million of net assets, 0.500% of
the next $100 million, and 0.450% of net assets over $400 million; and (iii) for
the International Equity Portfolio: 1.00% of the first $250 million of net
assets and 0.90% of net assets over $250 million; and (iv) for the LifeSpan
Capital Appreciation Portfolio and LifeSpan Balanced Portfolio: 0.85% of the
first $250 million of net assets and 0.75% of net assets in excess of $250
million, and (v) for the LifeSpan Diversified Income Portfolio: 0.75% of the
first $250 million of net assets and 0.65% of net assets in excess of $250
million. During 1996 OFI earned investment management fees of $5,817,245 for the
Total Return Portfolio, $2,801,667 for the Growth Portfolio, $569,471 for the
International Equity Portfolio, $281,564 for the LifeSpan Capital Appreciation
Portfolio, $355,893 for the LifeSpan Balanced Portfolio, and $171,569 for the
LifeSpan Diversified Income Portfolio.
OFI, located at Two World Trade Center, New York, NY 10048-0203, has operated as
an investment adviser since April 30, 1959. It and its affiliates currently
advise U.S. investment companies with assets aggregating over $62 billion as of
December 31, 1996, and having more than 3 million shareholder accounts. OFI is
owned by Oppenheimer Acquisition Corp., a holding company owned in part by
senior management of OFI, and ultimately controlled by MassMutual. OFI has
entered into sub-advisery agreements with other investment advisers under which
the sub-adviser manages the investments of one or more of the underlying
Portfolios of the Panorama Fund.
OFI has entered into investment sub-advisery agreements with three-sub advisers
to assist in the selection of portfolio investments for the Panorama Fund's
International Equity Portfolio, LifeSpan Diversified Income Portfolio, LifeSpan
Balanced Portfolio, and LifeSpan Capital Appreciation Portfolio.
Babson-Stewart Ivory International ("Babson-Stewart") located in Cambridge,
Massachusetts is the sub-adviser to the Panorama Fund's International Equity
Portfolio and the international stock components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio. Babson-Stewart is a
partnership formed in 1987 between David L. Babson & Company, Inc., an indirect
wholly-owned subsidiary of MassMutual, and Stewart Ivory & Company, Ltd.,
located in Edinburgh, Scotland. For providing its services under the sub-
advisery agreement with OFI, Babson-Stewart will receive a monthly fee from OFI,
computed daily at an annual rate based on the average daily net asset value of
the International Equity Fund and the portion of the LifeSpan Capital
Appreciation Portfolio and LifeSpan Balanced Portfolio allocated to the
international equity component. The annual fee paid to Babson-Stewart by OFI is
as follows: 0.75% for the first $10 million of net assets, 0.625% of the next
$15 million of net assets, 0.50% of the next $25 million of net assets, and
0.375% of net assets over $50 million. For purposes of determining the break-
points in the sub-advisery fee, the assets of the International Equity
Portfolio, the international equity component of the LifeSpan Capital
Appreciation Portfolio and the International Equity component of the LifeSpan
Balanced Portfolio are not aggregated. In 1996, Babson-Stewart received $486,204
for managing the assets of the International Equity Portfolio.
<PAGE>
BEA Associates ("BEA"), located in New York, New York is the sub-adviser to the
high yield bond component of the Panorama Fund's LifeSpan Diversified Income
Portfolio, the LifeSpan Balanced Portfolio, and the LifeSpan Capital
Appreciation Portfolio. For providing its services under the sub-advisory
agreement with OFI, BEA will receive a monthly fee from OFI, computed daily at
an annual rate based on the collective average daily net asset value of the
portion of the LifeSpan Diversified Income LifeSpan Capital Appreciation, and
LifeSpan Balanced Portfolios allocated to the high yield bond component. The
annual fee paid to BEA is as follows: 0.45% for the first $25 million of
collective net assets, 0.40% of the next $25 million of collective net assets,
35% of the next $50 million of collective net assets, and 0.25% of collective
net assets over $100 million. For purposes of calculating the fee payable to
BEA, the collective net asset values of the portion of the LifeSpan Portfolios
allocated to the high yield bond component are aggregated with that portion of
the net asset value of the assets of Oppenheimer Series Fund, Inc. managed by
BEA.
Pilgrim, Baxter & Associates ("Pilgrim Baxter") is the sub-adviser to the small
cap component of the Panorama Fund's LifeSpan Balanced Portfolio and the
LifeSpan Capital Appreciation Portfolio. For providing its services under the
sub-advisory agreement with OFI, Pilgrim Baxter will receive a monthly fee from
OFI, computed daily at an annual rate based on the collective average daily net
asset value of the portion of the LifeSpan Balanced Portfolio and LifeSpan
Capital Appreciation Portfolio allocated to the small cap component. The annual
fee paid to Pilgrim Baxter is 0.60% of collective net assets. For purposes of
calculating the fee payable to Pilgrim Baxter, the collective net asset values
of the portion of the LifeSpan Portfolios allocated to the small cap component
are aggregated with that portion of the net asset value of the assets of
Oppenheimer Series Fund, Inc. managed by Pilgrim Baxter.
MML Series Investment Fund Annual Expenses for 1996
(as a percentage of the average net assets of a Fund)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
MML Equity Index Fund 0.0%(1) 0.0%(1) 0.0%(1)
</TABLE>
(1) The MML Equity Index Fund had no operating expenses in 1996 since it had not
yet commenced operations. 1997 estimated fees are 0.40% Management Fees plus
0.11% Other Expenses which would equal 0.51% of Total Fund Operating Expenses.
MassMutual has agreed to bear the expenses of the MML Equity Index Fund (other
than the management fee, interest, taxes, brokerage commissions and
extraordinary expenses) in excess of 0.11% of average daily net asset value of
the Fund through April 30, 1998. MassMutual expects that it will be required to
reimburse the expenses of the MML Equity Index Fund pursuant to this undertaking
in 1997.
Oppenheimer Variable Account Funds Annual Expenses for 1996
(as a percentage of the average net assets of a Fund)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
Oppenheimer Global Securities Fund 0.73% 0.08% 0.81%
Oppenheimer Capital Appreciation Fund 0.72% 0.03% 0.75%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Oppenheimer Growth Fund 0.75% 0.04% (1) 0.79% (1)
Oppenheimer Growth & Income Fund 0.75% 0.25% 1.00%
Oppenheimer Multiple Strategies Fund 0.73% 0.04% 0.77%
Oppenheimer High Income Fund 0.75% 0.06% 0.81%
Oppenheimer Strategic Bond Fund 0.75% 0.10% 0.85%
Oppenheimer Bond Fund 0.74% 0.04% 0.78%
Oppenheimer Money Fund 0.45% 0.04% 0.49%
</TABLE>
(1) In 1996, OFI, on a voluntary one-time basis, agreed to reimburse the
Oppenheimer Growth Fund an amount equal to 0.02% of average daily net asset
value due to non-recurring expenses incurred in connection with the Jefferson
Pilot Appreciation Fund, Inc. acquisition. Absent this reimbursement, the Other
Expenses for this Fund would have been 0.06% and the Total Operating Expenses
would have been 0.81%. OFI does not anticipate making any expense reimbursements
to this Fund in 1997.
Panorama Series Fund, Inc. Annual Expenses for 1996
(as a percentage of the average net assets of a Portfolio)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
Panorama Total Return Portfolio 0.55% 0.0% 0.55%
Panorama Growth Portfolio 0.57% 0.01% 0.58%
Panorama International Equity Portfolio 1.00% 0.21% 1.21%
Panorama LifeSpan Diversified Income Portfolio 0.75% 0.32% 1.07%
Panorama LifeSpan Balanced Portfolio 0.85% 0.32% 1.17%
Panorama LifeSpan Capital Appreciation Portfolio 0.85% 0.45% 1.30%
</TABLE>
Additional and more detailed information concerning the MML Funds, the
Oppenheimer Funds, and the Panorama Fund's Portfolios, including information
about the other expenses of such Funds and Portfolios, may be found in the
accompanying Prospectuses for the MML Trust, the Oppenheimer Trust, and the
Panorama Fund.
THE SEPARATE ACCOUNT
The Separate Account was established on June 9, 1982 as a separate investment
account of MML Bay State by MML Bay State's Board of Directors in accordance
with the provisions of Section 376.309 of the Missouri Revised Statutes.
However, when MML Bay State re-domesticated to the State of Connecticut in June
1997, the Separate Account became subject to the insurance laws and regulations
of Connecticut.
The Separate Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. Registration does not involve supervision
of the management or investment practices or policies of either the Separate
Account or of MML Bay State. Under Connecticut law, however, both MML Bay State
and the Separate Account are subject to regulation by the Insurance Department
of the state of Connecticut. Designated segments of the Separate Account will be
used to receive and invest premiums for other variable life insurance policies
issued by MML Bay State. Such a segment, the GVUL Segment, has been established
for the Policy.
<PAGE>
Although the assets of the Separate Account are assets of MML Bay State, that
portion of the Separate Account assets equal to the reserves and other
liabilities of the Separate Account attributable to the Policies may not be used
to satisfy any obligations that may arise out of any other business We may
conduct. They may, however, become subject to liabilities arising from other
variable life insurance policies which the Separate Account funds. In addition,
We may from time to time, at our discretion, transfer to Our general account
those assets which exceed the reserves and other liabilities of the Separate
Account. Such transfers will not adversely affect the Separate Account.
Income, realized gains or losses, and unrealized gains or losses from each
Division are credited to or charged against that Division without regard to any
of our other income, gains, or losses.
MML Bay State may accumulate in the Separate Account the charge for expense and
mortality risks, the Monthly Deduction assessed against the Policy and
investment results applicable to those assets that are in excess of net assets
supporting the Policies.
Investment of the Separate Account. The designated segment of the Separate
- ----------------------------------
Account has sixteen Divisions attributable to the Policy. Each Division invests
in shares of either the MML Trust, the Oppenheimer Trust, or the Panorama Fund.
The Divisions of the Separate Account are:
The MML Equity Index Division - Amounts credited to this Division are invested
in shares of MML Equity Index Fund, or its successor.
The Oppenheimer Money Division - Amounts credited to this Division are invested
in shares of Oppenheimer Money Fund, or its successor.
The Oppenheimer Bond Division - Amounts credited to this Division are invested
in shares of Oppenheimer Bond Fund, or its successor.
The Oppenheimer Strategic Bond Division - Amounts credited to this Division are
invested in shares of Oppenheimer Strategic Bond Fund, or its successor.
The Oppenheimer High Income Division - Amounts credited to this Division are
invested in shares of Oppenheimer High Income Fund, or its successor.
The Oppenheimer Growth & Income Division - Amounts credited to this Division are
invested in shares of Oppenheimer Growth & Income Fund, or its successor.
The Oppenheimer Multiple Strategies Division - Amounts credited to this Division
are invested in shares of Oppenheimer Multiple Strategies Fund, or its
successor.
The Oppenheimer Growth Division - Amounts credited to this Division are invested
in shares of Oppenheimer Growth Fund, or its successor.
The Oppenheimer Capital Appreciation Division - Amounts credited to this
Division are invested in shares of Oppenheimer Capital Appreciation Fund, or its
successor.
<PAGE>
The Oppenheimer Global Securities Division - Amounts credited to this Division
are invested in shares of Oppenheimer Global Securities Fund, or its successor.
The Panorama Total Return Division - Amounts credited to this Division are
invested in shares of the Panorama Total Return Portfolio, or its successor.
The Panorama Growth Division - Amounts credited to this Division are invested in
shares of the Panorama Growth Portfolio, or its successor.
The Panorama International Equity Division - Amounts credited to this Division
are invested in shares of the Panorama International Equity Portfolio, or its
successor.
The Panorama LifeSpan Capital Appreciation Division - Amounts credited to this
Division are invested in shares of the Panorama LifeSpan Capital Appreciation
Portfolio, or its successor.
The Panorama LifeSpan Balanced Division - Amounts credited to this Division are
invested in shares of the Panorama LifeSpan Balanced Portfolio, or its
successor.
The Panorama LifeSpan Diversified Income Division - Amounts credited to this
Division are invested in shares of the Panorama LifeSpan Diversified Income
Portfolio, or its successor.
The shares of the underlying Fund purchased by each Division will be held by MML
Bay State as custodian of the Separate Account.
Although there are currently sixteen Divisions available to a Policyowner, a
Policyowner may allocate Account Value to no more than eight Divisions at any
one time. To allocate Net Premium or to transfer Account Value to a ninth
Division which does not have Account Value allocated to it, a Policyowner must
transfer 100% of the Account Value from one or more of the eight "active"
Divisions to which allocations are currently made.
MML Equity Index Fund (the "MML Fund") is a separate series of shares of MML
Series Investment Fund (the "MML Trust"), a no load, open-end management
investment company. Massachusetts Mutual Life Insurance Company ("MassMutual"),
the parent company of MML Bay State, acts as investment manager to each of the
MML Funds which are part of the MML Trust, including the MML Equity Index Fund.
MassMutual has entered into an investment sub-advisery agreement with Mellon
Equity Associates ("Mellon Equity") providing for Mellon Equity to manage the
investment and reinvestment of assets with respect to the management of the MML
Equity Index Fund. Mellon Equity is an indirect subsidiary of Mellon Bank
Corporation and is located in Pittsburgh, Pennsylvania. As of December 31, 1996,
Mellon Equity and its employees managed approximately $11 billion and served as
the investment adviser or sub-adviser of 9 other investment companies.
MassMutual and Mellon Equity are registered as investment advisers under the
Investment Advisers Act of 1940.
OppenheimerFunds, Inc. ("OFI") acts as investment manager to the Oppenheimer
Variable Account Funds (the "Oppenheimer Trust") and the Panorama Series Fund,
Inc. (the "Panorama Fund"). The Oppenheimer Money Fund, Oppenheimer Bond Fund,
Oppenheimer Strategic Bond Fund, Oppenheimer High Income Fund, Oppenheimer
Growth & Income Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer Growth
Fund, Oppenheimer Capital Appreciation Fund, and Oppenheimer Global Fund are
part of the Oppenheimer Trust, an open-end, diversified, management investment
company, which is available to act
<PAGE>
as the investment vehicle for separate accounts for variable insurance policies
offered by insurance companies. The Panorama Total Return Portfolio, Panorama
Growth Portfolio, Panorama International Equity Portfolio, Panorama LifeSpan
Capital Appreciation Portfolio, Panorama LifeSpan Balanced Portfolio, and
Panorama LifeSpan Diversified Income Portfolio are part of the Panorama Series
Fund, Inc., an open-end, diversified, management investment company, which is
available to act as the investment vehicle for separate accounts for variable
insurance policies offered by insurance companies.
OFI has entered into investment sub-advisery agreements with three sub-advisers
to assist in the selection of portfolio investments for the Panorama Fund's
International Equity Portfolio, LifeSpan Diversified Income Portfolio, LifeSpan
Balanced Portfolio, and LifeSpan Capital Appreciation Portfolio. Babson-Stewart
Ivory International ("Babson-Stewart") located in Cambridge, Massachusetts is
the sub-adviser to the International Equity Portfolio and the international
stock components of the LifeSpan Balanced Portfolio and the LifeSpan Capital
Appreciation Portfolio. Babson-Stewart is a partnership formed in 1987 between
David L. Babson & Company, Inc., an indirect wholly-owned subsidiary of
MassMutual, and Stewart Ivory & Company, Ltd., located in Edinburgh, Scotland.
BEA Associates located in New York, New York is the sub-adviser to the high
yield bond component of the LifeSpan Diversified Income Portfolio, the LifeSpan
Balanced Portfolio, and the LifeSpan Capital Appreciation Portfolio. Pilgrim,
Baxter & Associates ("Pilgrim Baxter") is the sub-adviser to the small cap
component of the LifeSpan Balanced Portfolio and the LifeSpan Capital
Appreciation Portfolio. With respect to the Oppenheimer Trust Funds and those
Panorama Fund portfolios which do not utilize sub-advisers, OFI defines the
composition of each respective fund and portfolio, and furnishes advice and
recommendations with respect to the investments, investment policies and
purchase and sale of securities. OFI, Babson-Stewart, BEA Associates, and
Pilgrim Baxter are registered as investment advisers under the Investment
Advisers Act of 1940.
The MML Trust is a no load, open end management investment company registered
under the 1940 Act. The Oppenheimer Trust and the Panorama Fund are open-end,
diversified management investment companies registered under the 1940 Act. The
MML Trust consists of five MML Funds each of which has its own investment
objectives and policies. The Oppenheimer Trust consists of nine Oppenheimer
Funds, each of which has its own investment objectives and policies. The
Panorama Fund consists of seven portfolios, each of which has its own investment
objectives and policies. MassMutual maintains the MML Trust for the purpose of
providing vehicles for the investment of assets held in various separate
investment accounts, including the Separate Account, established by MML Bay
State or by MassMutual or any of its affiliate life insurance companies. The
Oppenheimer Trust and Panorama Fund were established for the purpose of
providing investment vehicles for investment only by variable life insurance
contracts and variable annuity contracts. Shares of the MML Funds are not
offered to the general public, but solely to separate investment accounts
established by MassMutual and life insurance company affiliates of MassMutual,
including MML Bay State. Shares of the Oppenheimer Trust and Panorama Fund are
not offered to the general public, but solely to insurance company separate
accounts affiliated and unaffiliated with MML Bay State which fund variable
annuities and variable life insurance contracts.
INVESTMENT OBJECTIVES
The investment objective of MML Equity Index Fund is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. ("Standard & Poor's 500" and "S&P 500(C)" are
trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use.
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's or
The McGraw-Hill Companies, Inc.)
<PAGE>
The investment objective of the Oppenheimer Money Fund is to maximize current
income from investments in "money market" securities consistent with low capital
risk and maintenance of liquidity.
The investment objective of the Oppenheimer Bond Fund is to seek a high level of
current income from investment in high yield fixed-income securities rated "Baa"
or better by Moody's or "BBB" or better by Standard & Poor's. Secondarily, the
Fund seeks capital growth when consistent with its primary objective.
The investment objective of the Oppenheimer Strategic Bond Fund is to seek a
high level of current income principally derived from interest income from
investments in U.S. government securities, high yield fixed-income securities,
and foreign fixed income securities and to seek to enhance such income by
writing covered call options on debt securities.
The investment objective of the Oppenheimer High Income Fund is to earn a high
level of current income by investing primarily in a diversified portfolio of
high yield, fixed-income securities, including long-term debt obligations and
preferred stock issues believed by OFI, in its capacity as investment manager of
the Fund, not to involve undue risk. This Fund's investment policy is to assume
certain risks (described more fully in the attached prospectus for the
Oppenheimer Trust) in seeking high yield, which is ordinarily associated with
high risk securities, commonly known as "junk bonds," in the lower rating
categories of the established securities ratings services, and unrated
securities.
The investment objective of the Oppenheimer Growth & Income Fund is to seek a
high total return (which includes growth in the value of its shares as well as
current income) from equity and debt securities. From time to time this Fund may
focus on small to medium capitalization common stocks, bonds and convertible
securities.
The investment objective of the Oppenheimer Multiple Strategies Fund is to seek
a total investment return (which includes current income and capital
appreciation in the value of its shares) from investments in common stocks and
other equity securities, bonds and other debt securities, and "money market"
securities.
The investment objective of the Oppenheimer Growth Fund is to seek to achieve
capital appreciation by investing in securities of well-known established
companies (companies which have a history of earnings and dividends). The type
of securities in which this Fund invests will be primarily common stocks, as
well as securities having the investment characteristics of common stocks, such
as convertible preferred stock and convertible bonds.
The investment objective of the Oppenheimer Capital Appreciation Fund is capital
appreciation. The type of securities in which this Fund invests will be
primarily common stocks, as well as securities having the investment
characteristics of common stocks, such as convertible preferred stock and
convertible bonds. In seeking this objective the Fund will emphasize investments
in securities of "growth-type" companies. Such companies are believed to have
relatively favorable long-term prospects for an increased demand for the
particular company's products or services.
The investment objective of the Oppenheimer Global Securities Fund is to seek
long-term capital appreciation through investing a substantial portion of its
invested assets in securities of foreign issuers, growth-type companies and
special investment opportunities (anticipated acquisitions, mergers or other
unusual developments) which are considered by OFI, in its capacity as investment
manager of the Funds, to have appreciation possibilities. The type of securities
in which this Fund invests will be primarily common stocks, as well as
securities having the investment characteristics of common stocks, such as
convertible
<PAGE>
preferred stock, convertible bonds and American Depository Receipts. Current
income is not an investment objective of the Oppenheimer Global Securities Fund.
The investment objective of the Panorama Total Return Portfolio is to seek to
maximize total investment return (including both capital appreciation and
income) principally by allocating its asset among stocks, corporate bonds, U.S.
Government securities and money market instruments according to changing market
conditions.
The investment objective of the Panorama Growth Portfolio is to seek long-term
growth of capital by investing primarily in common stocks with low
price-earnings ratios and better-than-anticipated earnings. Realization of
current income is a secondary consideration.
The investment objective of the Panorama International Equity Portfolio is to
seek long-term growth of capital by investing primarily in equity securities of
companies wherever located, the primary stock market of which is outside the
United States.
The investment objective of the Panorama LifeSpan Capital Appreciation Portfolio
is to seek long-term capital appreciation by investing in a strategically
allocated portfolio of equities and fixed income securities consisting primarily
of stocks. Current income is not a primary consideration.
The investment objective of the Panorama LifeSpan Balanced Portfolio is to seek
a blend of capital appreciation and income by investing in a strategically
allocated portfolio of stocks and bonds with a slightly stronger emphasis on
stocks.
The investment objective of the Panorama LifeSpan Diversified Income Portfolio
is to seek high current income, with opportunities for capital appreciation by
investing in a strategically allocated portfolio of equities and fixed income
securities consisting primarily of bonds.
The Separate Account purchases and redeems shares of the Funds at their net
asset value which is determined at the time of the receipt of the purchase order
or redemption request without the imposition of any sales or redemption charge.
Boston Safe Deposit and Trust Company, with its home office located at One
Boston Place, Boston, Massachusetts 02108 acts as custodian for the MML Equity
Index Fund. The Bank of New York, with its home office located at One Wall
Street, New York, NY 10015, acts as custodian for each of the Oppenheimer Funds.
State Street Bank and Trust Company, with its home office located at 225
Franklin Street, Boston, Massachusetts, 02110, acts as custodian for the
Panorama Fund and each of its Portfolios.
The assets of certain variable annuity separate accounts for which MML Bay State
or an affiliate is the depositor are invested in shares of the MML Funds.
Because these separate accounts are invested in the same underlying MML Funds it
is possible that material conflicts could arise between Policyowners and owners
of the variable annuity contracts. Possible conflicts could arise if: (i) state
insurance regulators should disapprove or require changes in investment
policies, investment advisers or principal underwriters or if MML Bay State
should be permitted to act contrary to actions approved by holders of the
Policies under rules of the Securities and Exchange Commission; (ii) adverse tax
treatment of the Policies or the variable annuity contracts would result from
utilizing the same underlying MML Funds; (iii) different investment strategies
would be more suitable for the variable annuity contracts than for the Policies;
or (iv) state insurance laws or regulations or other applicable laws would
prohibit the funding of both the Separate Account and other investment accounts
by the same MML Funds. The Board of Trustees of the MML Trust will follow
monitoring procedures which have been developed to determine whether material
conflicts
<PAGE>
have arisen. Such Board will have a majority of Trustees who are not interested
persons of the MML Trust or MML Bay State and determinations whether or not a
material conflict exists will be made by a majority of such disinterested
Trustees. If a material irreconcilable conflict exists, MML Bay State will take
such action at its own expense as may be required to cause the Separate Account
to be invested solely in shares of mutual funds which offer their shares
exclusively to variable life insurance separate accounts unless, in certain
cases, the holders of both the Policies and the variable annuity contracts vote
not to effect such segregation.
The Oppenheimer Trust and the Panorama Fund were established for use as an
investment vehicle by variable contract separate accounts such as the Separate
Account. Accordingly, it is possible that a material irreconcilable conflict may
develop between the interests of Policyowners and other separate accounts
investing in the Oppenheimer Trust or Panorama Fund. The Board of Trustees of
the Oppenheimer Trust (the "Trustees") and the Board of Directors of the
Panorama Fund (the "Directors") will monitor their respective investment company
for the existence of any such conflicts. If it is determined that a conflict
exists, the Trustees or the Directors, as the case may be, will notify MML Bay
State, and appropriate action will be taken to eliminate such irreconcilable
conflicts. Such steps may include: (i) withdrawing the assets allocable to some
or all of the separate accounts from the particular Oppenheimer Fund or Panorama
Fund Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Oppenheimer Fund or Panorama Fund
Portfolio; (ii) submitting the question whether such segregation should be
implemented to a vote of all affected Policyowners; and (iii) establishing a new
registered management investment company or managed separate account.
Rates of Return. Tables 1 and 2 show the Effective Annual Rates of Return and
- ---------------
One Year Total Returns, respectively, of the Funds based on the actual
investment performance (after deduction of investment management fees and direct
operation expenses). These rates of return do not reflect the mortality and
expense risk charges assessed against the Separate Account.
Table 3 shows the return, after deduction of investment management fees and
direct operation expenses of the fund, and deduction of the mortality and
expense risk charges assessed against the Separate Account.
The rates of return shown are not necessarily indicative of future performance.
They may be considered in assessing the competence and performance of
MassMutual, OFI, Mellon Equity, Babson-Stewart, BEA, and Pilgrim Baxter as
investment advisers to the Funds.
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fund Since 20 15 10 5 3 1
Inception Years Years Years Years Years Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 5.98% --- --- 5.92% 4.42% 5.00% 5.13%
(date of inception - 04/03/85)
Oppenheimer Bond 9.94% --- --- 8.81% 7.68% 6.33% 4.80%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 7.35% --- --- --- --- 7.54% 12.07%
(date of inception - 05/03/93)
Oppenheimer High Income 13.46% --- 13.89% 14.88% 10.34% 15.26%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 40.54% --- --- --- --- --- 32.51%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 11.52% --- --- --- 11.67% 11.18% 15.50%
(date of inception - 02/09/87)
Oppenheimer Growth 14.52% --- --- 14.32% 16.24% 19.99% 25.20%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 15.66% --- --- 16.50% 16.68% 13.74% 20.22%
(date of inception - 08/15/86)
Oppenheimer Global Securities 10.65% --- --- --- 12.38% 4.25% 17.80%
(date of inception - 11/20/90)
Panorama Total Return 13.73% --- --- 12.32% 11.52% 10.41% 10.14%
(date of inception - 09/30/82)
Panorama Growth 17.79% --- --- 15.94% 17.33% 17.75% 18.87%
(date of inception - 01/21/82)
Panorama International Equity 8.78% --- --- --- --- 8.21% 13.26%
(date of inception - 05/13/92)
Panorama LifeSpan Capital 18.80% --- --- --- --- 17.97%
Appreciation (date of inception -
09/01/95)
Panorama LifeSpan Balanced 14.85% --- --- --- --- --- 13.38%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified 9.61% --- --- --- --- --- 6.93%
Income
(date of inception - 09/01/95)
</TABLE>
NOTE: This Table 1 shows the effective annual rates of return of the
Funds based on the actual investment performance (after deduction of
investment management fees and direct operation expenses). These rates
of return do not reflect the mortality and expense risk charges assessed
against the Separate Account. The MML Equity Index Fund did not commence
operations until April 30, 1997. Therefore, historical investment
results for the 1, 3, 5, 10, 15, and 20 year periods listed above do not
exist for this Fund.
<PAGE>
TABLE 2
ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
For the year ended 1996 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 5.13% 5.62% 4.20% 3.12% 3.76% 5.97% 7.80%
(date of inception - 04/03/85)
Oppenheimer Bond 4.80% 17.00% (1.94)% 13.04% 6.50% 17.63% 7.92%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 12.07% 15.33% (3.78)% 4.25%* -- -- --
(date of inception - 05/03/93)
Oppenheimer High Income 15.26% 20.37% (3.18)% 26.34% 17.92% 33.91% 4.65%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 32.51% 23.52%* -- -- -- -- --
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 15.50% 21.36% (1.95)% 15.95% 8.99% 17.48% (1.91)%
(date of inception - 02/09/87)
Oppenheimer Growth 25.20% 36.65% 0.97% 7.25% 14.53% 25.54% (8.21)%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 20.16% 32.52% (7.59)% 27.32% 15.42% 54.72% (16.82)%
(date of inception - 08/15/86)
Oppenheimer Global Securities 17.80% 2.24% (5.72)% 70.32% (7.11)% 3.39% 0.40%*
(date of inception - 11/20/90)
Panorama Total Return 10.14% 24.66% (1.97)% 16.28% 10.21% 28.79% 0.50%
(date of inception - 09/30/82)
Panorama Growth 18.87% 38.06% (0.51)% 21.22% 12.36% 37.53% (7.90)%
(date of inception - 01/21/82)
Panorama International Equity 13.26% 10.30% 1.44% 21.80% (4.32)%* -- --
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation 17.97% 6.65%* -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Balanced 13.38% 6.08%* -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 6.93% 5.69%* -- -- -- -- --
(date of inception - 09/01/95)
<CAPTION>
For the year ended 1989 1988 1987 1986 1985 1984 1983 1982
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 8.82% 7.31% 6.33% 5.68% 7.25%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Bond 13.32% 8.97% 2.52% 10.12% 18.82%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Strategic Bond -- -- -- -- -- -- -- --
(date of inception - 05/03/93)
Oppenheimer High Income 4.84% 15.58% 8.07% 4.73%* -- -- -- --
(date of inception - 04/30/86)
Oppenheimer Growth & Income -- -- -- -- -- -- -- --
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 15.76% 22.15% 3.97%* -- -- -- -- --
(date of inception - 02/09/87)
Oppenheimer Growth 23.59% 22.09% 3.32% 17.76% 9.50%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 27.57% 13.41% 14.34% (1.65)%* -- -- -- --
(date of inception - 08/15/86)
Oppenheimer Global Securities -- -- -- -- -- -- -- --
(date of inception - 11/20/90)
Panorama Total Return 22.98% 11.64% 4.26% 12.58% 25.43% 6.68% 20.20% 8.10%*
(date of inception - 09/30/82)
Panorama Growth 35.81% 14.46% 0.25% 11.58% 27.31% 4.89% 32.72% 33.00%*
(date of inception - 01/21/82)
Panorama International Equity -- -- -- -- -- -- -- --
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Balanced -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
</TABLE>
* The figures shown are one year total returns from inception of the Funds.
NOTE: This Table 2 shows the One Year Total Returns of the Funds based on the
actual investment performance (after deduction of investment management fees and
direct operation expenses). These rates of return do not reflect the mortality
and expense risk charges assessed against the Separate Account. The MML Equity
Index Fund did not commence operations until April 30, 1997. Therefore,
historical investment results for the above periods do not exist for this Fund.
<PAGE>
TABLE 3
AVERAGE ANNUAL TOTAL RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1996
The following performance information of the Divisions of the Separate Account
assumes that the Divisions have been in operation for the same periods as the
underlying Funds in which they invest. The returns reflect the total of the
income generated by the Fund net of total Fund operating expenses, plus or minus
capital gains and losses, realized or unrealized, and net of the current
mortality and expense risk charge.
<TABLE>
<CAPTION>
Fund 1 5 10 Since
Year Years Years Inception
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer Money* 4.38% 3.67% 5.17% 5.23%
(date of inception - 04/03/85)
Oppenheimer Bond 4.05% 6.93% 8.06% 9.19%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 11.32% -- -- 6.60%
(date of inception - 05/03/93)
Oppenheimer High Income 14.51% 14.13% 13.14% 12.71%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 31.76% -- -- 39.79%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 14.75% 10.92% -- 10.77%
(date of inception - 02/09/87)
Oppenheimer Growth 24.45% 15.49% 13.57% 13.77%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 19.47% 15.93% 15.75% 14.91%
(date of inception - 08/15/86)
Oppenheimer Global Securities 17.05% 11.63% -- 9.90%
(date of inception - 11/20/90)
Panorama Total Return 9.39% 10.77% 11.57% 12.98%
(date of inception - 09/30/82)
Panorama Growth 18.12% 16.58% 15.19% 17.04%
(date of inception - 01/21/82)
Panorama International Equity 12.51% -- -- 8.03%
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation 17.22% -- -- 18.05%
(date of inception - 09/01/95)
Panorama LifeSpan Balanced 12.63% -- -- 14.10%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 6.18% -- -- 8.86%
(date of inception - 09/01/95)
</TABLE>
<PAGE>
Performance information assumes current mortality and expense risk charges. If
guaranteed mortality and risk expense charges were used, the performance results
would be lower. Performance information for any Division of the Separate Account
reflects only the performance of a hypothetical investment in the Division
during the particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Fund in which the
Division invests and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future. Actual returns may be more or less than those shown and will depend on a
number of factors, including the investment allocations by a Policyowner and the
different investment rates of return for the Divisions.
* Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the performance information is available only
for the year 1987 and subsequent periods.
NOTE: The MML Equity Index Fund did not commence operations until April 30,
1997. Therefore, historical investment results for the 1, 5, and 10 year periods
for this Fund do not exist.
<PAGE>
GENERAL PROVISIONS OF THE POLICY
Premiums. The minimum initial premium payable by You when electing the variable
- --------
rider to the Certificate is $500. This amount must be paid in one lump sum. A
Policy is a Certificate to which a variable rider has been added. Your Employer
pays the estimated premium amount sufficient to pay the Premium Deduction and
Monthly Deduction(s) under the Policy during a selected term. This estimated
premium amount is called a Modal Term Premium. The term selected by Your
Employer can be one month, one quarter, a six month period or one year and is
called a Modal Term. The Modal Term Premium for a Policy is based upon cost of
insurance rates plus the Sales Load, State Premium Tax Charge, DAC Tax Charge,
the Monthly Administrative Charge, and any applicable rider charges. The method
of calculating the Modal Term Premium is shown in Appendix B. The planned
Employer paid premium is the Modal Term Premium for Your Policy. Subject to the
minimum and maximum premium limitations described below, You and Your Employer
may make unscheduled premium payments at any time and in any amount.
Planned Policy Premiums - Modal Term Premiums. The Modal Term selected by the
- ---------------------------------------------
Employer in the Participation Agreement forms the basis for the billing cycle
for your Policy. If the Employer selects a monthly Modal Term, then We will send
Your Employer a monthly premium invoice for your Policy. If the Employer selects
a yearly Modal Term, then We will send Your Employer an annual premium invoice.
The Employer may change the selected Modal Term at any time by written request
to Us. Your Modal Term is specified in Your Policy's schedule page. If You
become disassociated with the Employer, You may elect to continue the Policy on
Your own. If You choose to continue the Policy, You will become vested in all
Policy rights previously held by Your Employer, including the right to change
the Modal Term to any mode but monthly. In this event, MML Bay State will
discontinue billing for Your Modal Term premium.
The Modal Term Premium for the Policy may be subject to minimum and maximum
amounts depending on the Selected Face Amount of the Policy, the Insured's age,
and the Employer group.
There is no penalty if the Modal Term Premium is not paid, nor does payment of
this amount guarantee coverage for any period of time. Instead, the duration of
the Policy depends upon the Policy's Account Value. Even if Modal Term Premiums
are paid, the Policy terminates when the Account Value becomes insufficient to
pay certain monthly charges and a grace period expires without sufficient
payment. (For details see "Termination.")
Minimum and Maximum Premium Payments. While the Policy is in force, premiums may
- ------------------------------------
be paid at any time before the death of the Insured subject to certain
restrictions. There are no minimum or maximum premium payments under the Policy.
However, We have the right to refund all or a portion of a premium paid in any
year if it will increase the amount of insurance which requires a charge under
the Policy. Premium payments should be sent to our Principal Administrative
Office or to the address indicated for payment on any billing notice.
Termination. This Policy does not terminate for failure to pay premiums since
- -----------
payments, other than the initial premium for the variable account rider, are not
specifically required. Rather, if on a Monthly Calculation Date, the Account
Value less any Policy Debt is insufficient to cover the Monthly Deduction, the
Policy enters a 61-day grace period.
Grace Period. We allow 61 days to pay any premium necessary to cover the overdue
- ------------
Monthly Deduction. An Employer (or the Policyowner if the Policyowner has
disassociated from the Employer) will receive a
<PAGE>
notice from Us which sets forth this amount. During the grace period, the Policy
remains in force. If the payment is not made by the later of the 61 days or 30
days after We have mailed the written notice, the Policy will terminate without
value and insurance coverage will cease.
DEATH BENEFIT UNDER THE POLICY
The Death Benefit is the amount payable to the named Beneficiary(ies) when the
Insured dies. We pay the Beneficiary the Death Benefit amount determined as of
the date of death upon receipt of proof of death in good order. All or part of
the benefit can be paid in cash or applied under one or more of our payment
options as described under "Additional Provisions Of The Policy" - "Payment
Options."
A potential Certificate owner indicates the selected initial Face Amount in the
Enrollment Form. Increases in the Selected Face Amount may be requested by the
Policyowner by sending Us a new Enrollment Form, or if the Policyowner is no
longer associated with the Employer, an Application. Under Death Benefit Option
A, the Death Benefit is the greater of the Selected Face Amount in effect on the
date of death or the Minimum Face Amount in effect on the date of death, with
possible additions or deductions. Under Death Benefit Option B, the Death
Benefit is the greater of the sum of the Selected Face Amount in effect on the
date of death plus the Account value on the date of death, or the Minimum Face
Amount in effect on the date of death, with possible additions or deductions.
The Minimum Face Amount is equal to Account Value times the Minimum Face Amount
Percentage. The percentages depend upon the Insured's age. The percentages are
set forth in the Table Of Minimum Face Amount Percentages in the Policy. Added
to the greater of the Selected Face Amount or Minimum Face Amount is that part
of any Monthly Deduction applicable for the period beyond the date of death. Any
Policy Debt outstanding on the date of death and any Monthly Deduction unpaid as
of the date of death are deducted from the Death Benefit. We pay interest on the
Death Benefit from the date of death to the date the Death Benefit is paid or a
payment option becomes effective. The interest rate equals the rate determined
under the Interest Payment Option as described in "Additional Provisions Of The
Policy" - "Payment Options" (or a higher rate if required by state law.)
The Selected Face Amount may be increased upon request by the Policyowner,
subject to MML Bay State's then current guidelines regarding guaranteed issue,
simplified issue, and regular underwriting. Guaranteed issue is only available
to Employees of an Employer group. For those Policyowners subject to simplified
or regular underwriting, We will require adequate evidence of insurability prior
to approving an increase in the Selected Face Amount. A request for a decrease
in the Selected Face Amount will be honored by Us once each Policy Year provided
the Policy maintains a minimum Death Benefit of $50,000. Decreases in the
Selected Face Amount may have tax consequences. (For details see "Federal Income
Tax Considerations" - "Policy Proceeds, Premiums, and Loans.")
Any requested increase in the Selected Face Amount will be effective on the
Monthly Calculation Date which is on, or next follows, the later of: (i) the
date 15 days after a written request for such change has been received and
approved by Us; or (ii) the requested effective date of the change. Any
requested decrease in the Selected Face Amount will be effective on the Monthly
Calculation Date which is on, or next follows, the later of: (i) the date 15
days after a written request for such change has been received and approved by
Us; (ii) the one year period following the effective date of the previously
requested decrease; or (iii) the requested effective date of the change.
The Policyowner may change Death Benefit Option by written request subject to
Our current guidelines regarding proof of insurability. There is no charge for a
change in Death Benefit Option. The effective date of any such change will be on
the Policyowner's Policy Anniversary following the date the written
<PAGE>
request is received by Us in good order, or if We receive the written request
within the 15 day period prior to a Policy Anniversary, the change will be
effective on the second Policy Anniversary following the date of the request.
MML Bay State will honor a request for a later effective date provided the date
coincides with the Policyowner's Policy Anniversary.
Any increase for Policyowners no longer associated with the Employer must be at
least $5,000. Under Death Benefit Option A, the Death Benefit is unaffected by
investment experience unless the Death Benefit is based on the Minimum Face
Amount. Under Option B, the Death Benefit may be increased or decreased by
investment experience. (No increase will be allowed after the Policy Anniversary
Date succeeding the Insured's 75th birthday.)
Example: The following example shows how the Death Benefit may vary as a result
of investment performance and Death Benefit Option in effect on the date of
death.
<TABLE>
<CAPTION>
Policy A Policy B
-------- --------
<S> <C> <C>
(a) Selected Face Amount: $100,000 $100,000
(b) Account Value on Date of Death $30,000 $50,000
(c) Minimum Face Amount Percentage
on Date of Death: 280% 280%
(d) Minimum Face Amount $84,000 $140,000
(b x c):
Death Benefit if
Option A in effect
(greater of a or d) $100,000 $140,000
Death Benefit if
Option B in effect
(greater of (i) a + b
or (ii) d): $130,000 $150,000
</TABLE>
(Examples assume no additions to or deductions from the Selected Face Amount or
Minimum Face Amount are applicable.)
ACCOUNT VALUE AND CASH SURRENDER VALUE
Account Value. The Account Value of the Policy is equal to the Variable Account
- -------------
Value plus the Fixed Account Value. The Account Value of the Policy is held in
one or more Divisions and the GPA. Initially, this value equals the net amount
of the first premium paid (combined Employer and Policyowner premium) under the
Policy. If Your Policy has an unexpired Free Look Period, this amount will be
allocated to the Guaranteed Principal Account until the expiration of the Free
Look Period. Thereafter, Account Value attributable to Net Premiums paid by You
will be allocated to the GPA and/or Divisions according to Your instructions.
Billed Modal Term Premiums payable by the Employer are always allocated to the
GPA.
<PAGE>
Transactions with respect to the Account Value are effected by the purchase and
sale of accumulation units. Purchases and sales are made at the unit value as of
the Valuation Time on the Valuation Date if the premium or transaction request
for such purchase or sale is received by Us before the Valuation Time.
Otherwise, purchases and sales will be made as of the next following Valuation
Date or a later date requested by the Policyowner. Unit values are determined on
each Valuation Date.
Transfers. All or part of the Account Value may be transferred among Divisions
- ---------
by written request. Transfers between Divisions may be by dollar amount or by
whole-number percentage. There is no limit on the number of transfers a
Policyowner may make. MML Bay State does not currently charge a fee for
transfers in excess of six (6) during any one Policy Year. However, the Company
reserves the right to charge a fee not to exceed $10 per transfer if there are
more than six transfers in a Policy Year. Policyowners, however, may transfer
all funds in the Separate Account to the GPA at any time regardless of the
number of transfers previously made.
Transfers from the GPA to the Separate Account may be made only once during each
Policy Year. Each such transfer may not exceed (at the time of the transfer) the
lesser of (i) 25% of Your Policy's Fixed Account Value (excluding Policy Debt),
or (ii) Fixed Account Value (excluding Policy Debt) less an amount equal to one
plus the number of Monthly Calculation Dates remaining in Your Modal Term
multiplied by Your most recent Monthly Deduction. However, restriction (i) does
not apply if in each of the previous three Policy Years, 25% of the Account
Value in the GPA has been transferred and there have been no premium payments or
transfers (except as a result of a policy loan) to the GPA. All transfers made
on one Valuation Date are considered one transfer.
Automated Account Re-Balancing. Automated Account Re-Balancing permits the
- ------------------------------
Policyowner to specify specific whole-number percentages of a Policyowner's
Account Value to be maintained in any combination of Divisions and the GPA. Once
We have received a written request in proper form for Automated Account
Re-Balancing, We will make transfers once a quarter to and from the Divisions
and the GPA to re-adjust a Policyowner's Account Value to the percentages
specified. This enables the Policyowner to maintain a specific portfolio
allocation. Quarterly re-balancing is based upon the Policy Year instead of a
calendar year. The Automated Account Re-Balancing is considered one transfer per
Policy Year.
Automated Account Re-Balancing can be started, changed or canceled at any time.
Re-balancing will only be made on a quarterly basis on the Monthly Calculation
Date. The effective date of the first automated re-balancing will be the first
Monthly Calculation Date after the request is received by the Principal
Administrative Office. If the request is received before the end of the Free
Look Period, the effective date of the first re-balancing will be coincident
with the end of this Period. Automated Account Re-Balancing is not subject to
the restrictions on transfers from the GPA to the Separate Account. (For details
see "Transfers.") Policyowners who utilize Automated Account Re-Balancing may
not simultaneously utilize Automated Account Value Transfers.
Automated Account Value Transfer. Automated Account Value Transfer permits the
- --------------------------------
Policyowner to specify transfers of a specific dollar amount or a whole-number
percentage of a Division's Account Value to be transferred monthly from that
Division to any combination of Divisions and the GPA. Automated Account Value
Transfers are not available from more than one Division or from the GPA. This
process is considered one transfer per Policy Year.
The main objective of Automated Account Value Transfer is to shield the
Policyowner's investment from short term price fluctuations. Theoretically, a
lower than average cost per unit may or may not be achieved
<PAGE>
over the long term. This plan of investing allows investors to take advantage of
market fluctuations but does not assure a profit or protect against a loss in
declining markets.
Automated Account Value Transfer can be started, changed or canceled at any
time. Transfers will only be made on a monthly basis on the Monthly Calculation
Date. The effective date of the first automated transfer will be the first
Monthly Calculation Date after the request is received by the Principal
Administrative Office. If the request is received before the end of the Free
Look Period, the effective date of the first automated transfer will be
coincident with the end of this Period.
Transfers will occur automatically. The Policyowner will specify the specific
dollar amounts or whole-number percentages to be transferred and the Division
from which the transfers will be made, the Division(s) and/or GPA to which the
automated transfer is to be made and the number of months during which transfers
will continue.
If the value of the Division from which transfers are being made falls below the
total transfer amount, the remaining value in that Division will be transferred
to the designated receiving Division(s) and/or GPA and no more automated
transfers will be processed. Automated Account Value Transfer is subject to the
restrictions on transfers from the GPA to the Separate Account. (For details see
"Transfers.") Policyowners who utilize Automated Account Value Transfers may not
simultaneously utilize Automated Account Re-Balancing.
Investment Return. The investment return of a Policy is based on:
- -----------------
1. The Account Value held in each Division for that Policy; and
2. The investment experience of each Division as measured by its actual
net rate of return; and
3. The interest rate credited on Account Values held in the GPA.
The investment experience of a Division reflects increases or decreases in the
net asset value of the shares of the underlying Fund, any dividend or capital
gains distributions declared by the Fund, and any charges against the assets of
the Division. This investment experience is determined each day on which the net
asset value of the underlying Fund is determined - that is, on each Valuation
Date. The actual net rate of return for a Division measures the investment
experience from the end of one Valuation Date to the end of the next Valuation
Date.
Cash Surrender Value. The Policy may be surrendered for its full Cash Surrender
- --------------------
Value at any time while the Insured is living. Unless a later effective date is
selected, surrender is effective on the date We receive the Policy and a written
request in proper form at our Principal Administrative Office. The Policy and a
written request for surrender are deemed received on the date on which they are
received by mail in proper form at MML Bay State's Principal Administrative
Office. If, however, the date on which they are received is not a Valuation
Date, or if they are received other than through the mail after a Valuation
Time, they are deemed received on the next Valuation Date. The full Cash
Surrender Value is the Account Value less any outstanding Policy Debt.
Withdrawals. Subject to certain conditions, after the Policy has been in force
- -----------
for six months a Policyowner can make a Withdrawal from the Policy on any
Monthly Calculation Date by sending a written request to Our Principal
Administrative Office. The minimum amount of a Withdrawal is $500 (before
deducting the withdrawal charge); the maximum amount is the Cash Surrender Value
minus an
<PAGE>
amount equal to one plus the number of Monthly Calculation Dates remaining in
Your Modal Term multiplied by Your most recent Monthly Deduction. The amount of
the Withdrawal is deducted from the Policy's Account Value at the end of the
Valuation Period applicable to the Monthly Calculation Date on which the
Withdrawal is made. The Policyowner must specify the GPA or the Division(s) from
which the Withdrawal is to be made. The withdrawal amount attributable to a
Division or the GPA may not exceed the non-loaned Account Value of that Division
or GPA. A Withdrawal from the GPA may not exceed an amount equal to one plus the
number of Monthly Calculation Dates remaining in Your Modal Term multiplied by
Your most recent Monthly Deduction. A withdrawal charge equal to the lesser of
2.0% of the Withdrawal or $25.00, is deducted from each Withdrawal. The Account
Value will automatically be reduced by the amount of the Withdrawal. The
Selected Face Amount of the Policy will be reduced as needed to prevent an
increase in the amount of insurance which requires a charge, unless satisfactory
evidence of insurability is provided to MML Bay State. Withdrawals may have tax
consequences. (For details see "FEDERAL INCOME TAX CONSIDERATIONS" - "Policy
Proceeds," "Premiums and Loans.")
POLICY LOAN PRIVILEGE
The Policy provides a loan privilege which becomes effective six months after
the Policy Date. After such effective date, loans can be made on the Policy at
any time while the Insured is living. The maximum loan is an amount equal to: 1)
90% of Your Account Value at the time of the loan; less 2) any outstanding
Policy Debt before the new loan; less 3) interest on the loan being made and on
other outstanding loan(s) to Your next Policy Anniversary Date; less 4) an
amount equal to one plus the number of Monthly Calculation Dates remaining in
Your Modal Term multiplied by Your most recent Monthly Deduction. The Policy
must be properly assigned as collateral for the loan. (The maximum loan amount
may be different if required by state law.)
Source of Loan. The loan amount requested is taken from the Divisions and the
- --------------
GPA (excluding Policy Debt plus an amount equal to one plus the number of
Monthly Calculation Dates remaining in Your Modal Term multiplied by Your most
recent Monthly Deduction) in proportion to the non-loaned Account Value of each
on the date of the loan. Shares taken from the Divisions are liquidated and the
resulting dollar amounts are transferred to the GPA. We may delay the granting
of any loan attributable to the GPA for up to six months. We may also delay the
granting of any loan attributable to the Separate Account during any period that
the New York Stock Exchange (or its successor) is closed except for normal
weekend and holiday closings, or trading is restricted, or the Securities and
Exchange Commission (or its successor) determines that an emergency exists, or
the Securities and Exchange Commission (or its successor) permits Us to delay
payment for the protection of our policy owners.
If Loans Exceed the Policy Account Value. Policy Debt (which includes accrued
- ----------------------------------------
interest) must not equal or exceed the Account Value under the Policy. If this
limit is reached, We may terminate the Policy. To terminate for this reason We
will notify the Employer (or Policyowner if no longer associated with the
Employer) in writing. This notice states the amount necessary to bring the
Policy Debt back within the limit. If We do not receive a payment within 30 days
after the date We mailed the notice, the Policy terminates without value at the
end of those 30 days.
Termination of a policy under these circumstances could cause the Policyowner to
recognize gross income in the amount of any excess of the Policy Debt over the
sum of the Policyowner's previously unrecovered premium payments.
<PAGE>
Interest. The Employer elects either a fixed loan interest rate or, where
- --------
permitted, an adjustable loan interest rate to apply to the Policies. All
Certificates issued to the same group will have the same fixed or variable loan
interest rate. The fixed loan interest rate is 6% per year. When an adjustable
rate has been selected, MML Bay State sets the rate each year that will apply
for the next Policy Year. The maximum rate is based on the monthly average of
the composite yield on seasoned corporate bonds as published by Moody's
Investors Service or, if it is no longer published, a substantially similar
average. The maximum rate is the published monthly average for the calendar
month ending two months before the Policy Year begins, or 5%, whichever is
higher. If the maximum limit is not at least 1/2% higher than the rate in effect
for the previous year, We will not increase the rate. If the maximum limit is at
least 1/2% lower than the rate in effect for the previous year, We will decrease
the rate.
Interest accrues daily and becomes part of the Policy Debt as it accrues. It is
due on each Policy Anniversary. If not paid when due, the interest will be added
to the loan and, as part of the loan, will bear interest at the same rate. Any
interest capitalized on a Policy Anniversary will be treated the same as a new
loan and will be taken from the Divisions and the GPA in proportion to the
non-loaned Account Value in each. The inclusion of unpaid interest to
outstanding Policy Debt may result in tax consequences upon surrender or lapse
of the Policy. (For details see "FEDERAL INCOME TAX CONSIDERATIONS - Policy
Proceeds, Premiums and Loans.")
Repayment. All or part of any Policy Debt may be repaid at any time while the
- ---------
Insured is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the GPA to
the non-loaned portion of the GPA and the applicable Division(s). The transfer
is made in proportion to the non-loaned value in each Division at the time of
repayment. If the loan is not repaid, We deduct the amount due from any amount
payable from a full surrender or upon the death of the Insured.
Interest on Loaned Value. The amount equal to any outstanding Policy loans is
- ------------------------
held in the GPA and is credited with interest at a rate which is the greater of
3% and the Policy loan rate less a MML Bay State declared charge (currently
0.75%, guaranteed not to exceed a maximum of 1.25%) for expenses and taxes.
Effect of Loan. A Policy loan affects the Policy since the Death Benefit and
- --------------
Cash Surrender Value under a Policy are reduced by the amount of the loan.
Repayment of the loan increases the Death Benefit and Cash Surrender Value under
the Policy by the amount of the repayment.
As long as a loan is outstanding, a portion of the Policy's Account Value equal
to the loan is held in the GPA. This amount is not affected by the Separate
Account's investment performance. The Account Value is also affected because the
portion of the Account Value equal to the Policy loan is credited with an
interest rate declared by MML Bay State rather than a rate of return reflecting
the investment performance of the Separate Account. If the Policy is surrendered
with outstanding Policy Debt, tax consequences may result. (For details see
"FEDERAL INCOME TAX CONSIDERATIONS - Policy Proceeds, Premiums and Loans.")
FREE LOOK PROVISION
The Certificate owner may cancel the Certificate within 10 days (or longer if
required by state law) after the owner has received the Certificate. The
election of the variable account rider does not increase or decrease the
duration of this Free Look Period. If the Certificate owner chooses to cancel
the Certificate within the Free Look Period, the owner should mail or deliver
the Certificate and Certificate delivery receipt (if applicable) either to MML
Bay State or to the agent who sold the Certificate or to one of our
<PAGE>
agency offices. If the Certificate is canceled in this fashion, a refund will be
made to the owner. The refund equals either: 1) the Account Value plus any
Premium Deduction(s) and Monthly Deduction(s) reduced by any amounts borrowed or
withdrawn; or, where required by state law, 2) all premiums paid, reduced by any
amounts borrowed or withdrawn. During the Free Look Period, the initial Net
Premium We receive under Certificates to which a variable rider has been added
will be allocated to the Guaranteed Principal Account. If You elect the variable
account rider after the Free Look Period applicable to Your Policy has expired,
the Net Premiums You pay will be allocated among the Guaranteed Principal
Account and the Divisions of the Separate Account in accordance with Your
instructions.
EXCHANGE PRIVILEGE
The Policyowner may transfer the entire Account Value held in the Separate
Account to the GPA at any time. The transfer will take effect when We receive a
written request, signed by the Policyowner.
YOUR VOTING RIGHTS
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, as amended, the Policyowner is
entitled to give instructions as to how shares of the Funds held in the Separate
Account (or other securities held in lieu of such shares) deemed attributable to
the Policy shall be voted at meetings of shareholders of the Funds or the
Trusts. Those persons entitled to give voting instructions are determined as of
the record date for the meeting.
The number of shares of the Funds held in the Separate Account deemed
attributable to the Policy during the lifetime of the Insured are determined by
dividing the Policy's Account Value held in each Division, if any, by the net
asset value of one share in the underlying Fund in which the assets of the
Division are invested. Fractional votes are counted.
Policyowners receive proxy material and a form with which such instructions may
be given. Shares of the Funds held by the Separate Account, and attributable to
the Policies, to which no effective instructions have been received are voted
for or against any proposition in the same proportion as the shares as to which
instructions have been received. We reserve the right to vote shares of the
Funds not attributable to the Policies in Our discretion to the extent allowed
by applicable law.
OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. These actions will be taken in
accordance with applicable laws (including obtaining any required approval of
the Securities and Exchange Commission). If necessary, We will seek approval by
Policyowners.
Specifically, We reserve the right to:
. Create new segments of the Separate Account;
. Create new Separate Accounts;
. Combine any two or more Separate Accounts;
<PAGE>
. Make available additional Divisions investing in additional
investment companies;
. Substitute or merge two or more Divisions or Separate Accounts;
. Eliminate one or more Divisions;
. Invest the assets of the Separate Account in securities other than
shares of the Funds as a substitute for such shares already purchased
or as the securities to be purchased in the future;
. Operate the Separate Account as a management investment company under
the Investment Company Act of 1940, as amended, or in any other form
permitted by law; and
. De-register the Separate Account under the Investment Company Act of
1940, as amended, in the event such registration is no
longer required.
MML Bay State also reserves the right to change the name of the Separate
Account.
We have reserved all rights to the name MML Bay State and MML Bay State Life
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use our name or part of it, but We may also withdraw this right.
DIRECTORS AND PRINCIPAL OFFICERS OF MML BAY STATE
The directors and principal officers of MML Bay State, their positions and their
other business affiliations and business experience for the past five years are
listed below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NAME AND POSITION Age as of PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
12/31/96
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paul D. Adornato, Director and 58 Director (since 1987) and Senior Vice President-Operations, MML Bay
Senior Vice President-Operations State, since 1996; Senior Vice President, MassMutual, since 1986
- ----------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr., Director, 51 Director, President and Chief Executive Officer, MML Bay State, since
President and Chief Executive Officer 1996; Executive Vice President and General Counsel, MassMutual, since
1993; Senior Vice President and Deputy General Counsel, 1992-1993
- ----------------------------------------------------------------------------------------------------------------------------
John B. Davies, Director 47 Director, MML Bay State, since 1996; Executive Vice President,
MassMutual, since 1994; Associate Executive Vice President,
1994-1994; General Agent, 1982-1993
- ----------------------------------------------------------------------------------------------------------------------------
Anne Melissa Dowling, Director and 38 Director and Senior Vice President-Large Corporate Marketing, MML Bay
Senior Vice President-Large State, since 1996; Senior Vice President, MassMutual, since 1996;
Corporate Marketing Chief Investment Officer, Connecticut Mutual Life Insurance Company,
1994-1996; Senior Vice President-International, Travelers Insurance
Co., 1987-1993
- ----------------------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald, Director 48 Director, MML Bay State, since 1994; Executive Vice President,
Corporate Financial Operations, MassMutual, since 1994; Senior Vice
President, 1991-1994
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Maureen R. Ford, Director and Senior 41 Director and Senior Vice President-Annuity Marketing, MML Bay State,
Vice President-Annuity Marketing since 1996; Senior Vice President, MassMutual, since 1996; Marketing
Officer, Connecticut Mutual Life Insurance Company, 1989-1996
- ----------------------------------------------------------------------------------------------------------------------------
Isadore Jermyn, Director and Senior 46 Director (since 1990) and Senior Vice President and Actuary, MML Bay
Vice President and Actuary State, since 1996; Senior Vice President and Actuary, MassMutual,
since 1995; Vice President and Actuary, 1980-1995
- ----------------------------------------------------------------------------------------------------------------------------
Stuart H. Reese, Director and Senior 41 Director (since 1994) and Senior Vice President-Investments, MML Bay
Vice President-Investments State, since 1996; Senior Vice President, MassMutual, since 1993;
Investment Manager, Aetna Life and Casualty and Affiliates, 1979-1993
- ----------------------------------------------------------------------------------------------------------------------------
Thomas J. Finnegan, Jr., Director 61 Director (since 1997) and Secretary since 1990, MML Bay State, Vice
and Secretary. President, Secretary and Associate General Counsel, MassMutual, since
1984
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OFFICERS (other than those who are also Directors):
- ----------------------------------------------------------------------------------------------------------------------------
Ann Iseley 40 Treasurer, MML Bay State, since 1996; Vice President and Treasurer,
MassMutual, since 1996; Chief Financial and Operations Officer,
Connecticut Mutual Financial Services, 1994-1996; Controller, The
Mack Company, 1993-1994; Vice President-Finance, Mutual of New York,
1988-1993
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE GUARANTEED PRINCIPAL ACCOUNT
Because of the exemptive and exclusionary provisions, interests in MML Bay
State's general account (which include interests in the Guaranteed Principal
Account) are not registered under the Securities Act of 1933 and the general
account is not registered as an investment company under the Investment Company
Act of 1940, as amended. Accordingly, neither the general account nor any
interests therein are subject to the provisions of these Acts, and MML Bay State
has been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in the Prospectus relating to the general account.
Disclosures regarding the general account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
A Policyowner may allocate or transfer all or part of the Net Premium to the
GPA, and such amounts shall become part of MML Bay State's general account
assets. The allocation or transfer of amounts to the GPA does not entitle a
Policyowner to share in the investment experience of those assets. Instead, MML
Bay State guarantees that those amounts allocated to the GPA which are in excess
of any Policy loans will accrue interest daily at a minimum effective annual
rate equal to 3%. For amounts equal to any Policy loans, the guaranteed rate is
the greater of: (a) 3%; and (b) the Policy loan rate less a MML Bay State
declared charge for expenses and taxes. This charge is currently 0.75% and will
not exceed 1.25%. Although MML Bay State is not obligated to credit interest at
a rate higher than this minimum, it may declare a higher rate applicable for
such periods as it deems appropriate. Upon request, MML Bay State will inform
Policyowners of the then applicable rate. Since MML Bay State takes into account
the need to
<PAGE>
provide for its expenses and guarantees, the crediting rate declared by MML Bay
State shall be net of charges it imposes against the earnings of the GPA.
FEDERAL INCOME TAX CONSIDERATIONS
The ultimate effect of federal income taxes on values under this Policy and upon
the economic benefit to the Policyowner or Beneficiary depends on MML Bay
State's tax status and upon the tax status of the individual concerned. The
discussion contained herein is general in nature and is not an exhaustive
discussion of all tax questions that might arise under the Policies, and is not
intended as tax advice. Moreover, no representation is made as to the likelihood
of continuation of current federal income tax laws and Treasury Regulations or
of the current interpretations of the Internal Revenue Service. MML Bay State
reserves the right to make changes in the Policy to assure that it continues to
qualify as life insurance for tax purposes. For complete information on federal
and state tax considerations, a qualified tax adviser should be consulted. No
attempt is made to consider any applicable state or other tax laws.
MML Bay State - Tax Status. MML Bay State is taxed as a life insurance company
- --------------------------
under Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The
Separate Account is not a separate entity from MML Bay State and its operations
form a part of MML Bay State.
Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Values. The
investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policies. Under existing federal
income tax law, the Separate Account's investment income, including net capital
gains, is not taxed to MML Bay State to the extent applied to increase reserves
associated with the Policies. The reserve items taken into account at the close
of the taxable year for purposes of determining net increases or net decreases
must be adjusted for tax purposes by subtracting any amount attributable to
appreciation in the value of assets or by adding any amount attributable to
depreciation. MML Bay State's basis in the assets underlying the Separate
Account's Policies will be adjusted for appreciation or depreciation, to the
extent the reserves are adjusted. Thus, corporate level gains and losses, and
the tax effect thereof, are eliminated.
Due to MML Bay State's current tax status, no charge is made to the Separate
Account for MML Bay State's federal income taxes that may be attributable to the
Separate Account. Periodically, MML Bay State reviews the question of a charge
to the Separate Account for MML Bay State's federal income taxes. A charge may
be made for any federal income taxes incurred by MML Bay State that are
attributable to the Separate Account. Depending on the method of calculating
interest on Policy values allocated to the Guaranteed Principal Account (see
preceding section), a charge may be imposed for the Policy's share of MML Bay
State's federal income taxes attributable to that account.
Under current state laws, MML Bay State may incur state and local taxes (in
addition to premium taxes). At present, these taxes are not significant. If
there is a material change in state or local tax laws, MML Bay State reserves
the right to charge the Separate Account for such taxes, if any, attributable to
the Separate Account.
Policy Proceeds, Premiums, and Loans. MML Bay State believes that the Policy
- ------------------------------------
meets the statutory definition of life insurance under Code Section 7702 and
hence receives the same tax treatment as that accorded to fixed benefit life
insurance. Thus, the Death Benefit under the Policy is generally excludable from
the gross income of the Beneficiary under Section 101(a)(1) of the Code. As an
exception to this general rule, where a Policy has been transferred for value,
only the portion of the Death Benefit which is equal to the total consideration
paid for the Policy may be excluded from gross income. The Policyowner
<PAGE>
is not deemed to be in constructive receipt of the cash values, including
increments thereon, under the Policy until a full surrender or Withdrawal is
made.
Upon a full surrender of a Policy for its Cash Surrender Value the Policyowner
may recognize ordinary income for federal tax purposes. Ordinary income is
computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt (which may include unpaid interest), exceeds the
premiums paid but not previously recovered and any other consideration paid for
the Policy.
Decreases in Selected Face Amount and Withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) provides that where a reduction of
future benefits occurs during the first 15 years after a Policy is issued and
where there is a cash distribution associated with that reduction, the
Policyowner may be taxed on all or part of the amount distributed. After 15
years, such cash distributions are not subject to federal income tax, except to
the extent they exceed the total amount of premiums paid but not previously
recovered. Where the provisions of Code Section 7702(f) do not cause a taxable
event, a Withdrawal is taxable only to the extent that it exceeds the
Policyowner's as yet unrecovered premium contributions. MML Bay State suggests
that a Policyowner consult with his or her tax adviser in advance of a proposed
decrease in Selected Face Amount or Withdrawal as to the portion, if any, which
would be subject to federal income tax.
A change of Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances.
MML Bay State also believes that under current law any loan received under the
Policy will be treated as Policy Debt of a Policyowner, and that no part of any
loan under a Policy will constitute income to the Policyowner. Under the
"personal" interest limitation provisions of the Code, interest on Policy loans
used for personal purposes, which otherwise meet the requirements of Code
Section 264, will no longer be tax deductible. Other rules may apply to allow
all or part of the interest expense as a deduction if the loan proceeds are used
for "trade or business" or "investment" purposes. See a tax advisor for further
guidance.
If the Policy is owned by a business or corporation, the Code may impose
additional restrictions. The Act limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the
inside build-up of gain in corporate-owned life insurance policies by way of the
corporate alternative minimum tax, for those corporations subject to the
alternative minimum tax. The corporate alternative minimum tax could also apply
to a portion of the amount by which Death Benefits received exceed the Policy's
date of death cash value.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
For complete information on the impact of changes with respect to the Policy and
federal and state tax considerations, a qualified tax advisor should be
consulted.
MML Bay State makes no guarantee regarding the future tax treatment of any
Policy.
Modified Endowment Contracts. Contrary to the rules described above, loans,
- ----------------------------
collateral assignments, withdrawals, and other amounts distributed under a
"modified endowment contract" are taxable to the extent of any accumulated
income in the Policy. In general, the amount which may be subject to tax is the
excess of the Account Value (both loaned and unloaned) over the previously
unrecovered premiums paid.
<PAGE>
Death benefits paid under a modified endowment contract, however, are not taxed
any differently from death benefits payable under other life insurance
contracts.
A Policy is a modified endowment contract if it satisfies the definition of life
insurance set out in the Internal Revenue Code, but fails the additional "7-pay
test." A Policy fails this test if the accumulated amount paid under the
contract at any time during the first seven contract years exceeds the total
premiums that would have been payable under a policy providing for guaranteed
benefits upon the payment of seven level annual premiums. A Policy which would
otherwise satisfy the 7-pay test will still be taxed as a modified endowment
contract if it is received in exchange for a modified endowment contract.
Certain changes will require a Policy to be re-tested to determine whether it
has become a modified endowment contract. For example, a reduction in death
benefits during the first seven contract years will cause the Policy to be
re-tested as if it had originally been issued with the reduced death benefit. If
the premiums actually paid into the Policy exceed the limits under the 7-pay
test for a policy with the reduced death benefit, the Policy will become a
modified endowment contract. This change is effective retroactively to the
contract year in which the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the Policy is in
force will require the policy to be re-tested to determine whether it continues
to meet the 7-pay test.
A material change starts a new 7-pay test period. The term "material change"
includes many increases in death benefits. A material change does not include an
increase in death benefits which is attributable to the payment of premiums
necessary to fund the lowest level of death benefits payable during the first
seven contract years, or which is attributable to the crediting of interest with
respect to such premiums.
Since the Policy provides for flexible premium payments, We will carefully
monitor the Policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will be considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual Policyowners. The
penalty tax will not apply to distributions: (i) that are made on or after the
date the taxpayer attains age 591/2; or (ii) that are attributable to the
taxpayer's becoming disabled; or (iii) that are part of a series of
substantially equal periodic payments (made not less frequently than annually)
made for the life or life expectancy of the taxpayer. For complete information
with respect to modified endowment contract status, particularly where a Policy
is owned by other than an individual Policyowner, a qualified tax advisor should
be consulted.
Once a Policy fails the 7-pay test, loans, collateral assignments, withdrawals,
and other distributions occurring in the year of failure and thereafter become
subject to the rules for modified endowment contracts. In addition, a recapture
provision applies to loans and all other distributions received in anticipation
of failing the 7-pay test. Any distribution or loan made within two years prior
to failing the 7-pay test is considered to have been made in anticipation of the
failure.
Under certain circumstances, a loan or other distribution under a modified
endowment contract may be taxable even though it exceeds the amount of income
accumulated in the Policy. For purposes of determining the amount of income
received from a modified endowment contract, the law requires the aggregation of
all modified endowment contracts issued to the same Policyowner by an insurer
and its
<PAGE>
affiliates within the same calendar year. Therefore, loans and distributions
from any one such Policy are taxable to the extent of the income accumulated in
all the contracts required to be aggregated.
Diversification Standards. To comply with final regulations under Code Section
- -------------------------
817(h) ("Final Regulations"), each Fund or Portfolio of the MML Trust,
Oppenheimer Trust, and Panorama Fund is required to diversify its investments.
The Final Regulations generally require that on the last day of each quarter of
a calendar year no more than 55% of the value of a Trust's assets is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. A "look-through" rule applies to treat a
pro-rata portion of each asset of the Trust as an asset of the Separate Account.
All securities of the same issuer are treated as a single investment. Each
Government agency or instrumentality, however, is treated as a separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury Securities,
and for purposes of determining whether assets other than United States Treasury
Securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the
Trusts will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MML Bay State reserves the
right to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
MML Bay State intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
ADDITIONAL PROVISIONS OF THE POLICY
Paid-up Policy Date. The Paid-up Policy Date is the Policy Anniversary Date
- -------------------
after the Insured's 100th birthday. On this Date and at all times thereafter,
the Selected Face Amount will equal the Account Value, and the Death Benefit
Option will be Death Benefit Option A. As of this Date, the charge for cost of
insurance will be equal to $0 and premium payments will no longer be accepted.
The Policy does not lapse after the Paid-up Policy Date. The payment of planned
Policy premiums does not guarantee that the Policy will continue in force to the
Paid-up Policy Date.
Reinstatement Option. For a period of five (5) years after termination, a
- --------------------
Policyowner can request that We reinstate the Policy during the Insured's
lifetime. We will not reinstate the Policy if it has been returned for its Cash
Surrender Value. Note that a termination or reinstatement may cause the Policy
to become a modified endowment contract.
<PAGE>
Before We will reinstate the Policy, We must receive the following:
. A premium payment equal to the amount necessary to produce an Account
Value equal to 3 times the Monthly Deduction for the Policy on the
Monthly Calculation Date on or next following the date of
reinstatement;
. Evidence of insurability satisfactory to us; and
. Where necessary, a signed acknowledgment that the Policy has become a
modified endowment contract.
If We do reinstate the Policy, the Selected Face Amounts for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
Payment Options. All or part of the Death Benefit or Cash Surrender Value may
- ---------------
be taken in cash or as a series of level payments. Proceeds applied will no
longer be affected by the investment experience of the Divisions or the GPA.
To receive payments, the proceeds to be applied must be at least $2,000. If the
payments under any option are less than $20 each, We reserve the right to make
payments at less frequent intervals or to make a lump sum payment in
satisfaction of Our obligation. Payment options are as described below.
Fixed Amount Payment Option. Each monthly payment is for an agreed fixed amount
- ---------------------------
not less than $10 for each $1,000 applied under the option. Interest of at least
3% per year is credited each month on the unpaid balance and added to it.
Payments continue until the amount We hold runs out.
Fixed Time Payment Option. Equal monthly payments are made for any period
- -------------------------
selected, up to 30 years. The amount of each payment depends on the total amount
applied, the period selected and the interest rate We credit to the unpaid
balance. This interest rate will not be less than 3% per year.
Interest Payment Option. We hold amounts applied under this option and pay
- -----------------------
interest on the unpaid balance of at least 3% per year.
Lifetime Payment Option. Equal monthly payments are based on the life of a
- -----------------------
named person. Payments continue for the lifetime of that person. Three
variations are available:
Payments for life only;
Payments guaranteed for five, ten or twenty years; or
Payments guaranteed for the amount applied.
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
- -----------------------------
two named persons. While both named persons are living, one payment is made each
month. When one of the named persons dies, the same payment continues for the
lifetime of the other. Two variations are available:
. Payments guaranteed for 10 years; and
<PAGE>
. Payment for two lives only. No specific number of payments is
guaranteed. Under this option there may be one payment if the two named
persons die prior to the second payment.
Joint Lifetime Payment Option with Reduced Payments. Monthly payments are based
- ---------------------------------------------------
on the lives of two named persons. While both named persons are living, one
payment will be made each month. When one dies, payments are reduced by
one-third and will continue for the lifetime of the other.
Withdrawal Rights under Payment Options. If provided in the payment option
- ---------------------------------------
election, all or part of the unpaid balance may be withdrawn or applied under
any other option. Payments which are based on a named person's life may not be
withdrawn.
Beneficiary. A Beneficiary is any person named on our records to receive
- -----------
insurance proceeds after the Insured dies. A Policyowner names the Beneficiary
when he or she or it applies for the Policy. There may be different classes of
beneficiaries, such as primary and secondary. These classes set the order of
payment. There may be more than one Beneficiary in a class.
Any Beneficiary may be named an irrevocable beneficiary. An irrevocable
beneficiary is one whose consent is needed to change that Beneficiary. The
consent of any irrevocable beneficiary is needed to exercise any Policy right
except the right to:
. Change the frequency of premium payments.
. Change the premium payment plan.
. Reinstate the Policy after termination.
If no Beneficiary is living when the Insured dies, unless provided otherwise,
the Death Benefit is paid to the Policyowner or, if deceased, the Policyowner's
estate.
Changing the Policyowner or Beneficiary. The Policyowner or any Beneficiary may
- ---------------------------------------
be changed during the Insured's lifetime by writing to our Principal
Administrative Office. The change takes effect as of the date of the request,
even if the Insured dies before We receive it. Each change is subject to any
payment We made or other action by MML Bay State prior to receipt of the
request.
Assignment. The Policy may be assigned as collateral for a loan or other
- ----------
obligation, subject to any outstanding Policy Debt. We will not effectuate the
assignment unless We receive a signed copy of it at our Principal Administrative
Office and We consent to the assignment. We are not responsible for the validity
of any assignment.
Any amounts due to an assignee of the Policy which is assigned will be paid in
one sum.
Limits on Our Right to Challenge the Policy. We cannot contest the validity of a
- -------------------------------------------
Certificate after it has been in force during the lifetime of the Insured for a
period of two years from its Issue Date. This same two year period applies to
any increase in the Selected Face Amount. After that We cannot contest its
validity, except for failure to pay premiums.
Misstatement of Age. If the Insured's date of birth as given in the Enrollment
- -------------------
Form is not correct, an adjustment will be made. If the adjustment is made when
the Insured dies, the Death Benefit will reflect the
<PAGE>
amount provided by the most recent mortality charge according to the correct
age. If the adjustment is made before the Insured dies, then future Monthly
Deductions will be based on the correct age.
Suicide. If the Insured commits suicide within two years (or different period if
- -------
required by state law) from the Issue Date or an increase in the Selected Face
Amount and while the Policy is in force, We pay a limited Death Benefit in one
sum to the Beneficiary. The limited Death Benefit is the amount of premiums paid
for the Policy, less any Policy Debt or amounts withdrawn.
When We Pay Proceeds. If the Policy has not terminated, payment of the Cash
- --------------------
Surrender Value, loan proceeds or the Death Benefit are made normally within 7
days after We receive all required documents at our Principal Administrative
Office. We can delay payment of the Cash Surrender Value or any Withdrawal from
the Separate Account, loan proceeds attributable to the Separate Account, or the
Death Benefit during any period that:
It is not reasonably practicable to determine the amount because the New York
Stock Exchange (or its successor) is closed, except for normal weekend or
holiday closings, or trading is restricted; or
the Securities and Exchange Commission (or its successor) determines that an
emergency exists; or
the Securities and Exchange Commission (or its successor) permits Us to delay
payment for the protection of our policy owners; or
We are permitted by state law to delay such payment.
We may delay paying any Cash Surrender Value or loan proceeds based on the GPA
for up to 6 months from the date the request was received at our Principal
Administrative Office. We can delay payment of the entire Death Benefit if
payment is contested. We investigate all death claims arising within the
two-year contestable period. Upon receiving the information from a completed
investigation, We generally make a determination within five working days as to
whether the claim should be authorized for payment. Payments are made promptly
after authorization. If payment is delayed for 10 working days or more from the
effective date of surrender or Withdrawal, We add interest at the same rate as
is paid under the Interest Payment Option for the same period of time (but not
less than required by state law). The minimum amount of such interest is $25.
OPTIONAL BENEFITS OBTAINABLE BY RIDER
This Section is intended to provide only a very brief overview of additional
insurance benefits available by rider. For more information, contact Your
Employer or Your agent.
Your Employer may chose the following supplemental benefits to be available by
Rider under Your Policy.
Waiver of Monthly Charges Rider. With this rider We will waive the Monthly
- -------------------------------
Deduction on each Monthly Calculation Date for at least two years in the event
of the Insured's total disability which begins before age 65 and such total
disability continues for at least 6 months. The waiver will continue up to the
Insured's attained age 65, but in any event will never be less than two years.
Your Employer determines whether this Rider becomes available under Your Policy.
Accelerated Benefits Rider. This rider permits part of the proceeds of the
- --------------------------
Policy to be available before death if the Insured becomes terminally ill. MML
Bay State will require proof, satisfactory to Us, that the
<PAGE>
Insured is terminally ill and is not expected to live longer than 12 months
prior to activation of the rider. In return for the advanced payment, a lien is
established against the Policy, equal to the amount of the accelerated benefit.
No interest is charged against the lien. This Rider is available under all
Policies.
Accidental Death and Dismemberment Rider. With this rider We will pay a benefit
- ----------------------------------------
equal to a percentage of the Accidental Death and Dismemberment Rider Face
Amount specified in the following table if the Insured dies or becomes
dismembered due to accidental causes prior to attaining age 65. The Rider's
Selected Face Amount will be the lesser of the Policy's Selected Face Amount or
$500,000. Your Employer determines whether this Rider becomes available under
Your Policy.
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Loss of Life Percent of Rider Face
------------ ---------------------
Amount Payable
--------------
--------------------------------------------------------------------
<S> <C>
Life 100
--------------------------------------------------------------------
Both Limbs 100
--------------------------------------------------------------------
Both Arms 100
--------------------------------------------------------------------
Sight of Both Eyes 100
--------------------------------------------------------------------
One Limb and Sight of One Eye 100
--------------------------------------------------------------------
One Arm and Sight of One Eye 100
--------------------------------------------------------------------
One Limb or One Arm 50
--------------------------------------------------------------------
Vision of One Eye 50
--------------------------------------------------------------------
</TABLE>
RECORDS AND REPORTS
MML Bay State maintains all records and accounts relating to the Separate
Account and the GPA. Each year within 30 days after the Policy Anniversary, We
will mail to the Policyowner a report showing the Account Value at the beginning
of the previous Policy Year, all premiums paid since that time, all additions to
and deductions from Account Value during the year, and the Account Value, Death
Benefit, Cash Surrender Value and Policy Debt as of the latest Policy
Anniversary. This report contains any additional information required by any
applicable law or regulation.
SALES AND OTHER AGREEMENTS
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, is the principal underwriter of the Policy pursuant to an
Underwriting and Servicing Agreement to which MML Distributors, MML Bay State
and the Separate Account are parties. MML Investors Services, Inc. ("MMLISI"),
also located at 1414 Main Street, Springfield, MA 01144-1013, serves as the
co-underwriter of the Policies. Both MML Distributors and MMLISI are registered
with the Securities and Exchange Commission (the "SEC") as broker-dealers under
the Securities Exchange Act of 1934 and are members of the National Association
of Securities Dealers, Inc. (the "NASD").
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC and are members of the NASD ("selling
brokers"). We sell the Policies through agents who are licensed by state
insurance officials to sell the Policies. These agents are also registered
representatives of selling brokers or of MMLISI.
<PAGE>
When a supplement to the Application requesting one of the Policies is
completed, it is submitted to us. We or the selling broker perform suitability
review and, in some cases, We perform insurance underwriting. We determine
whether to accept or reject the application for the Policy and the Insured's
risk classification. If the application is not accepted, We will refund any
premium that has been paid.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. MML Distributors does
business under different variations of its name; including the name MML
Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma, South Dakota
and Washington; and the name MML Distributors, Limited Liability Company in the
states of Maine, Ohio and West Virginia.
Commissions Schedule. Agents or selling brokers receive commissions as a
- --------------------
percentage of the premium paid. General Agents may also receive a percentage of
commissions paid. Commissions paid will not exceed 24% of Modal Term Premiums,
plus 3% of premiums paid in excess of the Modal Term Premium, plus 0.20% of the
Policy's average annual Variable Account Value.
Agents and General Agents may receive commissions at lower rates on Policies
sold to replace existing insurance issued by MML Bay State or any of its
subsidiaries.
Bonding Arrangement. Three insurance company blanket bonds are maintained
- -------------------
providing $50,000,000 coverage for officers and employees of MML Bay State
(subject to a $350,000 deductible) and $50,000,000 coverage for MML Bay State's
general agents and agents (also subject to a $350,000 deductible).
LEGAL PROCEEDINGS
We are currently not involved in any material legal proceedings that adversely
impact the Policy.
EXPERTS
The audited statutory financial statements of MML Bay State as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996 included in this Prospectus, have been so included in reliance on the
reports, which include explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles and
the change in their opinion for the prior years presented, of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
FINANCIAL STATEMENTS
SEPARATE ACCOUNT FINANCIAL STATEMENTS
No financial statements of the GVUL Segment of the Separate Account have been
included herein because as of the date of this prospectus, the GVUL Segment had
not commenced operation.
MML BAY STATE FINANCIAL STATEMENTS
The financial statements of MML Bay State included herein should be considered
only as bearing upon the ability of MML Bay State to meet its obligations under
the Policy.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
INTERIM FINANCIAL STATEMENTS
for the period ended March 31, 1997 and 1996
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Assets:
Bonds $47,989.2 $44,929.6
Policy loans 11,005.0 9,988.3
Cash and short-term investments 20,659.5 7,013.9
Investment and insurance amounts receivable 2,692.9 2,277.8
Transfer due from separate account 55,194.2 50,186.8
Federal tax receivable 0.0 1,139.4
Separate account assets 982,888.6 706,668.9
Other assets 408.6 4,034.9
--------- ---------
$1,120,838.0 $826,239.6
============ ==========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION, continued
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Liabilities:
Policyholders' reserves and funds $27,374.1 $26,533.5
Policy claims and other benefits 741.1 1,074.1
Payable to parent 8,757.5 2,929.9
Federal income taxes payable 10,996.6 0.0
Accrued insurance expenses and taxes 6,156.4 6,905.3
Asset valuation reserve 258.2 228.8
Separate account reserves and liabilities 980,163.5 703,670.1
Other liabilities 10,163.5 7,235.6
--------- ---------
$1,044,610.9 $748,577.3
Shareholders' Equity 76,227.1 77,662.3
--------- ---------
$1,120,838.0 $826,239.6
============ ==========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
March 31,
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Income:
Premium income $302,413.1 $216,984.9
Net investment and other income 1,128.2 802.3
---------- ----------
303,541.3 217,787.2
---------- ----------
Benefits and expenses:
Policy benefits and payments 5,064.9 2,782.7
Addition to policyholders' reserves and funds 269,914.4 197,162.5
Commissions 7,429.5 4,581.3
State taxes, licenses and fees 6,139.2 5,036.6
Operating expenses 7,359.5 3,186.0
---------- ----------
295,907.5 212,749.1
---------- ----------
Net gain before federal income taxes and dividends 7,633.8 5,038.1
Federal income taxes 8,992.0 3,740.2
---------- ----------
Net gain (loss) from operations (1,358.2) 1,297.9
Net realized capital gain (loss) (44.5) (10.7)
---------- ----------
Net gain (loss) $ (1,402.7) $ 1,287.2
============= ===========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CHANGES
IN SHAREHOLDERS'EQUITY
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
March 31,
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Shareholders' Equity, beginning of year $77,662.3 $50,242.6
--------- ---------
Increases (decreases) due to:
Net income (1,402.7) 1,287.2
Change in asset valuation and investment reserves (29.4) (12.4)
Change in separate account surplus (5.0) 127.8
Change in non-admitted assets and other 1.9 (15.0)
--------- ---------
(1,435.2) 1,387.6
--------- ---------
Shareholders' Equity, end of year $76,227.1 $51,630.2
========= =========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Periods Ending
March 31,
1997 1996
--------- --------
(In Thousands)
<S> <C> <C>
Operating activities:
Net income (loss) $ (1,402.7) $ 1,287.2
Additions to policyholders' reserves, funds,
and net of transfers to separate accounts 507.6 416.6
Net realized capital loss 44.5 10.7
Change in payable to parent 5,827.7 (2,993.1)
Change in federal taxes payable 12,136.0 3,938.5
Other changes 604.7 2,071.2
--------- --------
Net cash provided by operating activities 17,717.8 4,731.1
--------- --------
Investing activities:
Purchases of investments and loans (7,078.4) (5,543.9)
Sales or maturities of investments and receipts
from repayments of loans 3,006.2 4,356.2
--------- --------
Net cash used in investing activities (4,072.2) (1,187.7)
--------- --------
Increase in cash and short-term investments 13,645.6 3,543.4
Cash and short-term investments, beginning of year 7,013.9 490.5
--------- --------
Cash and short-term investments, end of period $20,659.5 $ 4,033.9
--------- ---------
</TABLE>
See notes to statutory financial statements
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying interim financial statements of MML Bay State Life
Insurance Company ("the Company") have been prepared in conformity with
the practices of the National Association of Insurance Commissioners and
the accounting practices prescribed or permitted by the State of Missouri
("statutory accounting practices"), which practices were also considered
to be in conformity with generally accepted accounting principles
("GAAP"). In 1993, the Financial Accounting Standards Board ("FASB")
issued interpretation No. 40 ("Fin. 40"), "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises", which clarified that mutual life insurance companies issuing
financial statements described as prepared in conformity with GAAP after
1995 are required to apply all applicable GAAP pronouncements in preparing
those financial statements. In January 1995, the FASB issued Statement No.
120 ("SFAS 120"), Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts," which among other things, extended the
applicability of certain FASB statements to mutual life insurance
companies and deferred the effective date of Fin. 40 to financial
statements issued or reissued after 1996.
The accompanying statutory financial statements are different in some
respects from GAAP financial statements. The more significant differences
are as follows: (a) acquisition costs, such as commissions and other costs
in connection with acquiring new business, are charged to current
operations as incurred, whereas under GAAP these expenses would be
capitalized and recognized over the life of the policies; (b) policy
reserves are based upon statutory mortality and interest requirements
without consideration of withdrawals, whereas GAAP reserves would be based
upon reasonably conservative estimates of mortality, morbidity, interest
and withdrawals; (c) bonds are generally carried at amortized cost whereas
GAAP would value bonds at fair value and (d) deferred income taxes are not
provided for book-tax timing differences whereas GAAP would record
deferred income taxes.
The accompanying interim financial statements reflect, in the opinion of
the Company's management, all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the interim financial
position and results of operations. Such statements should be read in
conjunction with the annual financial statements.
2. Asset Valuation Reserve
In compliance with regulatory requirements, the Company maintains the
Asset Valuation Reserve. The balances as of March 31, 1997 and 1996,
reflect the year-to date activity and a pro rata share of the annual
contribution or amortization, respectively.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
as of December 31, 1996 and 1995 and
for the years ended December 31, 1996, 1995 and 1994
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
We have audited the accompanying statutory statement of financial position of
MML Bay State Life Insurance Company as of December 31, 1996 and 1995, and the
related statutory statements of income, changes in shareholder's equity, and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company prepared these
financial statements using statutory accounting practices of the National
Association of Insurance Commissioners and the accounting practices prescribed
or permitted by the Department of Insurance of the State of Missouri, which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
determinable at this time, are presumed to be material.
In our report dated February 23, 1996, we expressed our opinion that the 1995
and 1994 financial statements, prepared using statutory accounting practices,
presented fairly, in all material respects, the financial position of the MML
Bay State Life Insurance Company as of December 31, 1995, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles
("GAAP"). As described in Note 1 to the financial statements, financial
statements of stock life insurance subsidiaries of mutual life insurance
enterprises issued or reissued after 1996, and prepared in accordance with
statutory accounting principles, are no longer considered to be presentations in
conformity with GAAP. Accordingly, our present opinion on the 1995 and 1994
statutory financial statements as presented herein is different from that
expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of MML Bay State Life Insurance Company at December 31, 1996 and 1995, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MML Bay State Life Insurance
Company at December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, on
the statutory basis of accounting described in Note 1.
Springfield, Massachusetts Coopers & Lybrand, L.L.P.
February 7, 1997
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1996 1995
--------- -------
(In Thousands)
<S> <C> <C>
Assets:
Bonds $ 44,929.6 $ 41,260.6
Policy loans 9,988.3 6,444.9
Cash and short-term investments 7,013.9 490.5
Investment and insurance amounts receivable 2,277.8 1,268.0
Transfer due from separate account 50,186.8 29,015.6
Federal income tax receivable 1,139.4 215.5
Other assets 4,034.9 109.8
Separate account assets 706,668.9 265,188.5
---------- ----------
$826,239.6 $343,993.4
========== ==========
Liabilities:
Policyholders' reserves and funds $ 26,533.5 $ 19,095.9
Policy claims and other benefits 1,074.1 1,507.6
Payable to parent 2,929.9 3,165.2
Accrued insurance expenses and taxes 6,905.3 4,693.5
Asset valuation reserve 228.8 153.8
Other liabilities 7,235.6 2,200.7
Separate account reserves and liabilities 703,670.1 262,833.9
---------- ----------
748,577.3 293,650.6
---------- ----------
Shareholder's equity:
Common stock, $200 par value
25,000 shares authorized
12,501 shares issued and outstanding 2,500.2 2,000.2
Paid-in capital and contributed surplus 71,736.9 46,736.9
Surplus 3,425.2 1,605.7
---------- ----------
77,662.3 50,342.8
---------- ----------
$826,239.6 $343,993.4
========== ==========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
--------- -------- ------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income $441,212.1 $92,732.8 $54,481.4
Net investment and other income 8,430.6 4,305.8 3,531.8
Expense allowance on reinsurance ceded 0.0 526.5 132.4
---------- --------- ---------
449,642.7 97,565.1 58,145.6
---------- --------- ---------
Benefits and expenses:
Policy benefits and payments 11,035.0 5,691.0 2,939.9
Addition to policyholders' reserves, funds
and separate accounts 363,526.2 66,974.4 30,422.1
Operating expenses 24,032.2 11,222.9 11,960.6
Commissions 28,133.3 15,072.4 10,747.5
State taxes, licenses and fees 9,051.1 2,546.8 1,405.1
---------- --------- ---------
435,777.8 101,507.5 57,475.2
---------- --------- ---------
Net gain (loss) from operations
before federal income taxes 13,864.9 (3,942.4) 670.4
Federal income taxes (benefit) 11,829.0 632.8 (934.8)
---------- ----------- ----------
Net gain (loss) from operations 2,035.9 (4,575.2) 1,605.2
Net realized capital loss (58.1) (42.8) (24.4)
---------- --------- ---------
Net income (loss) $ 1,977.8 $ (4,618.0) $ 1,580.8
========== ========= =========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year $50,342.8 $55,963.0 $33,396.9
--------- --------- ---------
Increases (decrease) due to:
Net income (loss) 1,977.8 (4,618.0) 1,580.8
Additions to asset valuation reserve (75.0) (47.0) (43.3)
Change in separate account surplus 35.0 344.2 108.6
Surplus contribution 25,500.0 0.0 25,000.0
Prior year adjustment 0.0 (1,299.4) (4,101.5)
Change in accounting for mortgage backed
securities 0.0 0.0 21.5
Change in non-admitted assets and other (118.3) 0.0 0.0
--------- --------- ---------
27,319.5 (5,620.2) 22,566.1
--------- --------- ---------
Shareholder's equity, end of year $77,662.3 $50,342.8 $55,963.0
========= ========= =========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---------- ---------- -----------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 1,977.8 $ (4,618.0) $ 1,580.8
Additions to policyholders' reserves, funds,
and net of transfers to separate accounts 7,004.1 8,610.8 2,064.6
Net realized capital loss 58.1 42.8 24.4
Change in receivable from separate accounts (21,171.1) (7,907.6) (6,456.2)
Change in receivable (payable) to parent (235.4) (1,203.0) 5,145.0
Change in federal taxes receivable (payable) (923.9) (1,018.7) (910.3)
Other changes 1,536.8 (2,543.9) (1,178.9)
---------- ---------- ----------
Net cash provided by (used in) operating activities (11,753.6) (8,637.6) 269.4
---------- ---------- ----------
Investing activities:
Purchases of investments and loans (35,959.1) (28,440.1) (43,275.8)
Sales or maturities of investments and receipts
from repayments of loans 28,736.1 36,618.2 18,455.4
---------- ---------- ----------
Net cash provided by (used in) investing activities (7,223.0) 8,178.1 (24,820.4)
---------- ---------- ----------
Financing activities:
Capital and Surplus contribution 25,500.0 0.0 25,000.0
---------- ---------- ----------
Net cash provided by financing activities 25,500.0 0.0 25,000.0
---------- ---------- ----------
Increase (decrease) in cash and short-term investments 6,523.4 (459.5) 449.0
Cash and short-term investments, beginning of year 490.5 950.0 501.0
---------- ---------- ----------
Cash and short-term investments, end of year $ 7,013.9 $ 490.5 $ 950.0
========== ========== ==========
</TABLE>
See notes to statutory financial statements.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS
1. Operations
MML Bay State Life Insurance Company ("the Company") is a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual").
The Company's insurance operation consists primarily of flexible and limited
premium variable whole life insurance and variable annuities distributed
through career agents. On March 1, 1996, the operations of Connecticut
Mutual Life Insurance Company were merged into MassMutual.
2. Summary of Accounting Practices
The accompanying statutory financial statements, except as to form, have
been prepared in conformity with the practices of the National Association
of Insurance Commissioners and the accounting practices prescribed or
permitted by the State of Missouri ("statutory accounting practices"), which
practices were also considered to be in conformity with generally accepted
accounting principles ("GAAP"). In 1993, the Financial Accounting Standards
Board ("FASB") issued interpretations No. 40 ("Fin. 40"), "Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises", which clarified that mutual life insurance companies issuing
financial statements described as prepared in conformity with GAAP after
1995 are required to apply all applicable GAAP pronouncements in preparing
those financial statements. In January 1995, the FASB issued Statement No.
120 ("SFAS 120"), Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts," which among other things, extended the
applicability of certain FASB statements to mutual life insurance companies
and deferred the effective date of Fin. 40 to financial statements issued or
reissued after 1996. As required by generally accepted auditing standards,
the opinion expressed by our independent accountants on the 1995 and 1994
financial statements is different from that expressed in their previous
report.
The accompanying statutory financial statements are different in some
respects from GAAP financial statements. The more significant differences
are as follows: (a) acquisition costs, such as commissions and other costs
in connection with acquiring new business, are charged to current operations
as incurred, whereas under GAAP these expenses would be capitalized and
recognized over the life of the policies; (b) policy reserves are based upon
statutory mortality and interest requirements without consideration of
withdrawals, whereas GAAP reserves would be based upon reasonably
conservative estimates of mortality, morbidity, interest and withdrawals;
(c) bonds are generally carried at amortized cost whereas GAAP would value
bonds at fair value and (d) deferred income taxes are not provided for
book-tax timing differences whereas GAAP would record deferred income taxes.
The preparation of statutory financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, as well as disclosures of contingent assets and
liabilities, at the date of the statutory financial statements. Management
must also make estimates and assumptions that affect the amounts of revenues
and expenses during the reporting period. Future events, including changes
in the levels of mortality, morbidity, interest rates and asset valuations,
could cause actual results to differ from the estimates used in the
statutory financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
<PAGE>
a. Investments
Bonds are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at
amortized cost.
As promulgated by the National Association of Insurance Commissioners,
the Company adopted the retrospective method of accounting for
amortization of premium and discount on mortgage backed securities as of
December 31, 1994. This method considers prepayment assumptions for
mortgage backed securities, which were obtained from a prepayment model,
that factors in mortgage type, seasoning, coupon, current interest rate
and the economic environment. The effect of this change, $21.5 thousand,
was recorded as of December 31, 1994 as an increase to shareholders'
equity on the Statutory Statement of Financial Position and had no
material effect for 1996 and 1995 net income. Through December 31, 1994,
premium and discount on bonds were amortized into investment income over
the stated lives of the securities.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates
fair value.
In compliance with regulatory requirements, the Company maintains an
Asset Valuation Reserve and an Interest Maintenance Reserve. The Asset
Valuation Reserve and other investment reserves as prescribed by the
regulatory authorities, stabilize the shareholders' equity against
declines in the value of bonds. The Interest Maintenance Reserve
captures after-tax realized capital gains and losses which result from
changes in the overall level of interest rates for all types of fixed
income investments and amortizes these capital gains and losses into
income using the grouped method over the remaining life of the
investment sold or over the remaining life of the underlying asset. Net
realized after tax capital losses of $33.7 thousand in 1996 and net
realized after tax capital gains of $250.2 thousand in 1995 and net
realized after tax capital losses of $7.0 thousand in 1994 were charged
to the Interest Maintenance Reserve. Amortization of the Interest
Maintenance Reserve into net investment income amounted to $85.8
thousand in 1996, $42.1 thousand in 1995 and $86.9 thousand in 1994. The
Interest Maintenance Reserve is included in other liabilities on the
statutory Statement of Financial Position.
Realized capital gains and losses, less taxes, not includable in the
Interest Maintenance Reserve, are recognized in net income. Realized
capital gains and losses are determined using the specific
identification method. Unrealized capital gains and losses are included
in shareholders' equity.
b. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of variable
life insurance policyholders. Assets, consisting of holdings in an
open-end series investment fund affiliated with MassMutual, bonds,
common stocks, and short-term investments, are reported at fair value.
Transfer due from separate account represents the separate account
assets in excess of statutory benefit reserves. Premiums, benefits and
expenses of the separate accounts are reported on the Statutory
Statement of Income. The Company receives compensation for providing
administrative services to the separate account and for assuming
mortality and expense risks in connection with the policies. The Company
had $2,998.8 thousand and $2,354.6 thousand of its assets invested in
the separate account as of December 31, 1996 and 1995, respectively.
The net transfers to separate accounts of $356,088.6 thousand, $59,792.6
thousand and $28,141.7 thousand in 1996, 1995 and 1994, respectively,
are included in addition to policyholders' reserves, funds and separate
accounts.
<PAGE>
<PAGE>
c. Policyholders' Reserves
Policyholders' reserves for life contracts were developed using accepted
actuarial methods computed principally on the net level premium method
and the Commissioners' Reserve Valuation Method using the 1958 and 1980
Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 3.5 to 5.5 percent. Reserves for individual annuities
are based on accepted actuarial methods, principally at interest rates
ranging from 5.5 to 6.0 percent.
During 1994, actuarial guidelines requiring additional reserves for
immediate payment of claims became effective. While the Company's
aggregate reserves were sufficient, the reserves for certain products
were not recorded. The effect of correctly recording these reserves was
$1,299.4 thousand at December 31, 1994 and was recorded as an adjustment
to shareholders' equity during 1995.
d. Premium and Related Expense Recognition
Premium revenue is recognized annually on the anniversary date of the
policy. Commissions and other costs related to issuance of new policies,
maintenance and settlement costs, are charged to current operations.
e. Cash and Short-Term Investments
For purposes of the Statutory Statement of Cash Flows, the Company
considers all highly liquid short-term investments purchased with a
maturity of twelve months or less to be cash and short-term investments.
3. Stockholder's Equity
The Board of Directors of MassMutual has authorized the contribution of
funds to the Company sufficient to meet the capital requirements of all
states in which the Company is licensed to do business. Substantially all of
the statutory stockholder's equity is subject to dividend restrictions
relating to various state regulations which limit the payment of dividends
without prior approval. Under these regulations, $3,425.2 thousand of
stockholder's equity is available for distribution to shareholders in 1997
without prior regulatory approval.
4. Related Party Transactions
Investment and administrative services are provided to the Company pursuant
to a management services agreement with MassMutual. Service fees are accrued
based upon estimated costs and are billed the following period, when actual
costs are available. Fees incurred under the terms of this agreement were
$16,429.2 thousand, $6,588.1 thousand and $7,762.9 thousand in 1996, 1995
and 1994, respectively.
The Company had reinsurance agreements with MassMutual in which MassMutual
assumed specific plans of insurance on a coinsurance basis and on a yearly
renewal term basis. The coinsurance agreement was terminated in 1995. A
termination fee of $6,200.0 thousand was recorded as an expense and paid to
MassMutual for the rights to retain future fees and charges on the
reinsurance business. While the agreement was in effect, the Company ceded
premiums amounting to $29,597.0 thousand and $26,115.1 thousand in 1995 and
1994, respectively. Additionally, the Company ceded administrative and
insurance charges of $4,310.3 thousand in 1995 and $4,208.3 thousand in 1994
for policies issued in those years. The Company received $4,836.8 thousand
and $8,434.7 thousand and 1995 and 1994, respectively, as commissions and an
expense allowance. Reserves on all business ceded amounted to $8,027.9
thousand in 1995, immediately preceding the termination, which reduced
policyholders' reserves and funds. The Company's separate accounts retained
the assets applicable to variable life reserves of the policies reinsured
under the agreement with MassMutual. Premium income and the expense
allowance on reinsurance ceded differ from annual statement presentation.
<PAGE>
A provision in the Company's coinsurance agreement with MassMutual required
surrender charge offsets to be included in the ceding provisions of the
reinsurance contract with MassMutual. This surrender charge offset, inherent
in the reserve calculations of the separate account liabilities, is
considered funds which would be due to the general account of MassMutual if
the life policies were surrendered. During 1993, this provision was
incorrectly excluded from amounts recorded for the contract. The effect of
correctly recording this provision was $4,101.5 thousand at December 31,
1993 and was recorded as an adjustment to shareholders' equity during 1994.
The effects of this adjustment in 1994 were included in the expense
allowance on reinsurance ceded and all related tax benefits were recorded in
1995 and 1994 on the Statutory Statement of Income in accordance with the
accounting practices of the National Association of Insurance Commissioners.
During 1996 and 1994, MassMutual contributed additional paid in capital of
$25,000.0 thousand cash to the Company.
5. Federal Income Taxes
The provision for federal income taxes is based upon the Company's best
estimate of its tax liability. No deferred tax effect is recognized for
temporary differences that may exist between financial reporting and taxable
income. Accordingly, the federal tax provision, using the most current
information available, and adjusting for miscellaneous temporary
differences, primarily reserves and acquisition costs, resulted in an
effective tax rate which is other than the statutory tax rate.
The Internal Revenue Service is currently examining the Company's income tax
returns through the year 1992. Federal income tax returns for the years
1995, 1994 and 1993 are open to examination by the Internal Revenue Service.
The Company believes any adjustments resulting from such examinations will
not materially affect its statutory financial statements.
The Company plans to file its 1996 federal income tax return on a
consolidated basis with MassMutual and MassMutual's other life and non-life
affiliates. The Company and its life and non-life affiliates are subject to
a written tax allocation agreement which allocates tax liability in a manner
permitted under Treasury regulations. Generally, the agreement provides that
loss members shall be compensated for the use of their losses and credits by
other members.
The Company made federal tax payments of $12,811.7 thousand and $1,892.0
thousand in 1996 and 1995, respectively. No federal tax payments were made
during 1994.
6. Investments
The Company maintains a diversified investment portfolio. Investment
policies limit concentration in any asset class, geographic region, industry
group, economic characteristic, investment quality or individual investment.
a. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $ 7,767.8 $ 79.5 $ 41.1 $ 7,806.2
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
and Obligations of U. S.
Government Corporations
and Agencies
Mortgage-backed securities 8,265.9 42.1 64.6 8,243.4
Industrial securities 28,895.9 293.6 146.1 29,043.4
--------- ------ ------ ---------
TOTAL $44,929.6 $415.2 $251.8 $45,093.0
========= ====== ====== =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $ 7,929.3 $107.8 $1.0 $ 8,036.1
and Obligations of U. S.
Government Corporations
and Agencies
Mortgage-backed securities 11,979.4 114.9 35.9 12,058.4
Industrial securities 21,351.9 684.2 1.7 22,034.4
--------- ------ ----- ---------
TOTAL $41,260.6 $906.9 $38.6 $42,128.9
========= ====== ===== =========
</TABLE>
The carrying value and estimated fair value of bonds at December 31,
1996 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 6,383.8 $ 6,423.7
Due after one year through five years 13,043.8 13,203.9
Due after five years through ten years 12,929.9 12,865.2
Due after ten years 1,510.1 1,503.1
--------- ---------
33,867.6 33,995.9
Mortgage-backed securities, including
securities guaranteed by the
U.S. Government 11,062.0 11,097.1
--------- ---------
TOTAL $44,929.6 $45,093.0
========= =========
</TABLE>
Proceeds from sales and maturities of investments in bonds were
$28,736.1 thousand during 1996, $36,584.5 thousand during 1995 and
$17,742.4 thousand during 1994. Gross capital gains of $33.2 thousand
in 1996, $535.0 thousand in 1995 and $44.5 thousand in 1994 and gross
capital losses of $65.2 thousand in 1996, $87.0 thousand in 1995 and
$52.3 thousand in 1994 were realized on those sales, a portion of
which were included in the Interest Maintenance Reserve. The estimated
fair value of non-publicly traded bonds is determined by the Company
using a pricing matrix.
b. Other
It is not practicable to determine the fair value of policy loans
which do not have a stated maturity.
<PAGE>
7. Liquidity
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1996 are illustrated below:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C> <C>
Total policyholders' reserves and funds and
separate account liabilities $730,203.6
Not subject to discretionary withdrawal (143.3)
Policy loans (9,988.3)
-----------
Subject to discretionary withdrawal $720,072.0
----------
Total invested assets, including separate
investment accounts $768,600.7
Policy loans and other invested assets (9,988.3)
Readily marketable investments ----------- $758,612.4
----------
</TABLE>
8. Business Risks and Contingencies
Approximately 52% of the Company's premium revenue is derived from two
customers.
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to
be used to pay benefits to policyholders and claimants of insolvent
insurance companies. Many states allow these assessments to be credited
against future premiums. The Company believes such assessments in excess
of amounts accrued will not materially affect its financial position,
results of operations or liquidity. In 1996, the Company elected not to
admit $83.3 thousand of guaranty fund premium tax offset receivables
relating to prior assessments.
The Company is involved in litigation arising out of the normal course of
its business. Management intends to defend these actions vigorously. While
the outcome of litigation cannot be foreseen with certainty, it is the
opinion of management, after consultation with legal counsel, that the
ultimate resolution of these matters will not materially affect its
financial position, results of operations or liquidity.
9. Affiliated Companies
The relationship of the Company, its parent and affiliated companies as of
December 31, 1996 is illustrated below. Subsidiaries are wholly-owned by
the parent, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
<PAGE>
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investors Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation
Charter Oak Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
Oppenheimer Acquisition Corporation - 86.15%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 50%
MassMutual Corporate Value Limited - 46%
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
<PAGE>
APPENDIX A
Illustrations of Death Benefits (Option A & Option B), Cash Surrender Values and
Accumulated Premiums
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit and cash surrender value could vary over an extended
period of time, assuming the Funds experience hypothetical gross rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized), equivalent to constant gross annual rates of 0%, 6% and
12%. Table 1 shows Death Benefit Option A using the current schedule of charges.
Table 2 shows Death Benefit Option A using the guaranteed schedule of charges.
Table 3 shows Death Benefit Option B using the current schedule of charges.
Table 4 shows Death Benefit Option B using the guaranteed schedule of charges.
The tables are based on the following assumptions: 1) the Policyowner is age 45;
2) the Policyowner has requested a level Selected Face Amount of $250,000; 3) no
Policy loans have been made, 4) the Employer has selected an Annual Modal Term;
5) the Modal Term Premium is always allocated to the Guaranteed Principal
Account; 6) the Guaranteed Principal Account credits the Modal Term Premium
interest at an annual rate of 3%; and 7) and the Policyowner makes annual
Premium payments of $4,000 in excess of the Modal Term Premium for 20 years
which are allocated to the Separate Account.
These tables will assist in the comparison of death benefits and cash surrender
values for the Policy with those under other variable life policies which may be
issued by MML Bay State or other companies.
The death benefits and cash surrender values for a Policy would be different
from the amount shown if the rates of return of the Funds averaged 0%, 6% and
12% over a period of years but varied above and below that average in individual
Policy Years. They would also differ if any Policy loan were made during the
period of time illustrated. They would also be different depending upon the
allocation of investment value to each Division, if the rates of return for all
the Funds averaged 0%, 6% or 12% but varied above or below that average for
particular Funds.
The tables assume that the Modal Term Premium is credited interest at a
guaranteed rate of 3%. The current credited rate is higher than 3%. Therefore,
if current rates were used, the cash surrender values for the policy illustrated
in the tables would be higher.
The death benefits and cash surrender values shown in Table 1 & 3 reflect a
State Premium Tax deduction of 2% and a DAC Tax deduction of 0.25%, MML Trust,
Oppenheimer Trust, and Panorama Fund level expenses of 0.83% on an annual basis,
of the net asset value of the MML Trust, Oppenheimer Trust, and Panorama Fund
shares held by the Separate Account (This unweighted average reflects current
Fund level expenses), plus the following current charges:
1. A Sales Load of 0.75% of Premium
2. Administrative Charge, equal to a monthly $5.25 per Policy.
3. Cost of Insurance Protection, based on the current guaranteed issue rates
being charged by the Company.
4. Mortality and Expense Risk Charge, which is equal to 0.75% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
<PAGE>
The death benefits and cash surrender values shown in Table 2 & 4 reflect a
State Premium Tax deduction of 2% and a DAC Tax deduction of 0.25%, MML Trust,
Oppenheimer Trust, and Panorama Fund level expenses of 0.83% on an annual basis,
of the net asset value of the MML Trust, Oppenheimer Trust, and Panorama Fund
shares held by the Separate Account (This unweighted average reflects current
Fund level expenses), plus the following guaranteed charges:
1. A Sales Load of 5% of Premium (MML Bay State will establish a Sales Load
between 0.75% to 5% of Premium for a Policy upon its issuance. However,
once the Sales Load is established, it will not change for the life of the
Policy.)
2. Administrative Charge, equal to $9.00 per month.
3. Cost of Insurance Charge, based on 125% of the 1980 CSO Mortality Table.
4. Mortality and Expense Risk Charge, which is equal to 1.00% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
MassMutual has agreed to bear expenses of the MML Equity Index Fund (other than
the management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of 0.11% of average daily net asset value of the Fund
through April 30, 1998. MassMutual expects that it will be required to reimburse
the expenses of the MML Equity Index Fund pursuant to this undertaking in 1997.
Currently no charge is made against the Separate Account for federal income
taxes but MML Bay State reserves the right to charge the Separate Account for
federal income taxes attributable to the Separate Account if such taxes are
imposed in the future.
The fifth column of each table shows the amounts which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes,
of 5% per year, compounded annually.
<PAGE>
TABLE 1
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account
credited at 3% annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Gross Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 250000 250000 250000 3826 4055 4285
2 502 4000 4502 9652 250000 250000 250000 7600 8294 9016
3 535 4000 4535 14896 250000 250000 250000 11323 12727 14242
4 605 4000 4605 20476 250000 250000 250000 15000 17365 20018
5 641 4000 4641 26373 250000 250000 250000 18633 22217 26398
6 707 4000 4707 32634 250000 250000 250000 22225 27298 33453
7 742 4000 4742 39245 250000 250000 250000 25776 32616 41248
8 811 4000 4811 46259 250000 250000 250000 29294 38189 49870
9 915 4000 4915 53733 250000 250000 250000 32785 44038 59415
10 989 4000 4989 61658 250000 250000 250000 36250 50174 69977
11 1051 4000 5051 70044 250000 250000 250000 39692 56611 81663
12 1164 4000 5164 78968 250000 250000 250000 43121 63379 94611
13 1259 4000 5259 88439 250000 250000 250000 46540 70493 108953
14 1404 4000 5404 98535 250000 250000 255972 49963 77991 124864
15 1542 4000 5542 109281 250000 250000 284793 53396 85897 142397
16 1744 4000 5744 120776 250000 250000 313701 56861 94263 161701
17 1921 4000 5921 133032 250000 250000 347529 60359 103113 182910
18 2137 4000 6137 146127 250000 250000 381523 63910 112499 206229
19 2372 4000 6372 160124 250000 250000 417355 67531 122474 231864
20(age 65) 2603 4000 6603 175064 250000 250000 457625 71230 133081 260014
21 0 0 0 183817 250000 250000 488390 68373 137465 283948
22 0 0 0 193008 250000 250000 520987 65176 141939 310111
23 0 0 0 202658 250000 250000 555615 61648 146541 338790
24 0 0 0 212791 250000 250000 595994 57737 151279 370183
25 0 0 0 223431 250000 250000 635241 53386 156160 404612
26 0 0 0 234602 250000 250000 681168 48525 161197 442317
27 0 0 0 246332 250000 251266 730269 43079 166402 483622
28 0 0 0 258649 250000 254228 782757 36960 171776 528890
29 0 0 0 271581 250000 257098 838857 30060 177309 578522
30 0 0 0 285160 250000 259849 898808 22246 182993 632963
31 0 0 0 299418 250000 264299 969545 13372 188785 692532
32 0 0 0 314389 250000 268631 1045513 3166 194660 757618
33 0 0 0 330109 0 270886 1119001 0 200656 828890
34 0 0 0 346614 0 274917 1205840 0 206705 906647
35 0 0 0 363945 0 278774 1298854 0 212805 991492
40 0 0 0 464496 0 300585 1905678 0 244378 1549331
45 0 0 0 592828 0 324412 2827119 0 277275 2416341
50 0 0 0 756615 0 348726 4215315 0 314168 3797581
</TABLE>
<PAGE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 2
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Guaranteed Schedule of Charges
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account
credited at 3% annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Gross Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 250000 250000 250000 2615 2771 2927
2 502 4000 4502 9652 250000 250000 250000 5123 5591 6078
3 535 4000 4535 14896 250000 250000 250000 7522 8458 9470
4 605 4000 4605 20476 250000 250000 250000 9841 11403 13158
5 641 4000 4641 26373 250000 250000 250000 12041 14386 17127
6 707 4000 4707 32634 250000 250000 250000 14140 17424 21423
7 742 4000 4742 39245 250000 250000 250000 16094 20476 26030
8 811 4000 4811 46259 250000 250000 250000 17923 23558 31001
9 915 4000 4915 53733 250000 250000 250000 19640 26685 36387
10 989 4000 4989 61658 250000 250000 250000 21202 29814 42186
11 1051 4000 5051 70044 250000 250000 250000 22592 32925 48421
12 1164 4000 5164 78968 250000 250000 250000 23849 36059 55185
13 1259 4000 5259 88439 250000 250000 250000 24952 39194 62513
14 1404 4000 5404 98535 250000 250000 250000 25940 42373 70512
15 1542 4000 5542 109281 250000 250000 250000 26785 45571 79234
16 1744 4000 5744 120776 250000 250000 250000 27516 48825 88804
17 1921 4000 5921 133032 250000 250000 250000 28076 52082 99271
18 2137 4000 6137 146127 250000 250000 250000 28443 55339 110757
19 2372 4000 6372 160124 250000 250000 250000 28566 58575 123402
20(age 65) 2603 4000 6603 175064 250000 250000 250000 28376 61755 137362
21 0 0 0 183817 250000 250000 251294 21074 58126 146101
22 0 0 0 193008 250000 250000 261716 12642 53713 155783
23 0 0 0 202658 250000 250000 272803 2916 48410 166343
24 0 0 0 212791 0 250000 286231 0 42076 177783
25 0 0 0 223431 0 250000 298712 0 34519 190262
26 0 0 0 234602 0 250000 313841 0 25479 203793
27 0 0 0 246332 0 250000 329865 0 14606 218454
28 0 0 0 258649 0 250000 346807 0 1443 234329
29 0 0 0 271581 0 0 364707 0 0 251522
30 0 0 0 285160 0 0 383646 0 0 270173
31 0 0 0 299418 0 0 406349 0 0 290249
32 0 0 0 314389 0 0 430435 0 0 311910
33 0 0 0 330109 0 0 453143 0 0 335662
34 0 0 0 346614 0 0 480753 0 0 361468
35 0 0 0 363945 0 0 510325 0 0 389561
40 0 0 0 464496 0 0 700181 0 0 569253
45 0 0 0 592828 0 0 979596 0 0 837262
50 0 0 0 756615 0 0 1397295 0 0 1258824
</TABLE>
<PAGE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 3
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account
credited at 3% annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical Gross
Gross Annual Investment Annual Investment Return of
Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 253819 254048 254278 3819 4048 4278
2 502 4000 4502 9652 257579 258273 258994 7579 8273 8994
3 535 4000 4535 14896 261280 262680 264193 11280 12680 14193
4 605 4000 4605 20476 264922 267280 269925 14922 17280 19925
5 641 4000 4641 26373 268508 272078 276245 18508 22078 26245
6 707 4000 4707 32634 272038 277086 283212 22038 27086 33212
7 742 4000 4742 39245 275513 282310 290894 25513 32310 40894
8 811 4000 4811 46259 278933 287762 299362 28933 37762 49362
9 915 4000 4915 53733 282300 293450 308699 32300 43450 58699
10 989 4000 4989 61658 285614 299386 318993 35614 49386 68993
11 1051 4000 5051 70044 288876 305579 330341 38876 55579 80341
12 1164 4000 5164 78968 292088 312042 342853 42088 62042 92853
13 1259 4000 5259 88439 295249 318785 356647 45249 68785 106647
14 1404 4000 5404 98535 298361 325821 371855 48361 75821 121855
15 1542 4000 5542 109281 301424 333163 388622 51424 83163 138622
16 1744 4000 5744 120776 304440 340823 407107 54440 90823 157107
17 1921 4000 5921 133032 307409 348817 427487 57409 98817 177487
18 2137 4000 6137 146127 310331 357158 449957 60331 107158 199957
19 2372 4000 6372 160124 313208 365862 474729 63208 115862 224729
20(age 65) 2603 4000 6603 175064 316040 374944 502041 66040 124944 252041
21 0 0 0 183817 312283 377646 525149 62283 127646 275149
22 0 0 0 193008 308091 380134 550454 58091 130134 300454
23 0 0 0 202658 303497 382449 578262 53497 132449 328262
24 0 0 0 212791 298453 384556 608822 48453 134556 358822
25 0 0 0 223431 292906 386413 642414 42906 136413 392414
26 0 0 0 234602 286800 387975 679345 36800 137975 429345
27 0 0 0 246332 280076 389197 719959 30076 139197 469959
28 0 0 0 258649 272672 390030 764637 22672 140030 514637
29 0 0 0 271581 264514 390142 817492 14514 140412 563788
30 0 0 0 285160 255517 390273 877322 5517 140273 617832
31 0 0 0 299418 0 389545 947965 0 139545 677118
32 0 0 0 314389 0 388053 1023872 0 138053 741936
33 0 0 0 330109 0 385561 1097474 0 135561 812943
34 0 0 0 346614 0 381907 1184292 0 131907 890445
35 0 0 0 363945 0 376914 1277307 0 126914 975044
40 0 0 0 464496 0 328075 1884085 0 78075 1531776
45 0 0 0 592828 0 0 2805598 0 0 2397947
50 0 0 0 756615 0 0 4194113 0 0 3778480
</TABLE>
<PAGE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 4
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Guaranteed Schedule of Charges
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account
credited at 3% annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Gross Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 252595 252751 252906 2595 2751 2906
2 502 4000 4502 9652 255065 255531 256016 5065 5531 6016
3 535 4000 4535 14896 257406 258335 259339 7406 8335 9339
4 605 4000 4605 20476 259642 261188 262926 9642 11188 12926
5 641 4000 4641 26373 261734 264047 266754 11734 14047 16754
6 707 4000 4707 32634 263694 266923 270857 13694 16923 20857
7 742 4000 4742 39245 265475 269765 275211 15475 19765 25211
8 811 4000 4811 46259 267092 272583 279850 17092 22583 29850
9 915 4000 4915 53733 268552 275380 284809 18552 25380 34809
10 989 4000 4989 61658 269809 278104 290065 19809 28104 40065
11 1051 4000 5051 70044 270839 280724 295617 20839 30724 45617
12 1164 4000 5164 78968 271678 283267 301529 21678 33267 51529
13 1259 4000 5259 88439 272299 285700 307804 22299 35700 57804
14 1404 4000 5404 98535 272738 288050 314514 22738 38050 64514
15 1542 4000 5542 109281 272960 290275 321658 22960 40275 71658
16 1744 4000 5744 120776 272985 292387 329301 22985 42387 79301
17 1921 4000 5921 133032 272749 294308 337414 22749 44308 87414
18 2137 4000 6137 146127 272220 296000 346017 22220 46000 96017
19 2372 4000 6372 160124 271337 297405 355129 21337 47405 105129
20(age 65) 2603 4000 6603 175064 270025 298451 364764 20025 48451 114764
21 0 0 0 183817 261691 292548 368422 11691 42548 118422
22 0 0 0 193008 252387 285752 372262 2387 35752 122262
23 0 0 0 202658 0 277998 376331 0 27998 126331
24 0 0 0 212791 0 269203 380670 0 19203 130670
25 0 0 0 223431 0 259247 385294 0 9247 135294
26 0 0 0 234602 0 0 390198 0 0 140198
27 0 0 0 246332 0 0 395341 0 0 145341
28 0 0 0 258649 0 0 400666 0 0 150666
29 0 0 0 271581 0 0 406119 0 0 156119
30 0 0 0 285160 0 0 411684 0 0 161684
31 0 0 0 299418 0 0 417389 0 0 167389
32 0 0 0 314389 0 0 423311 0 0 173311
33 0 0 0 330109 0 0 429573 0 0 179573
34 0 0 0 346614 0 0 436295 0 0 186295
35 0 0 0 363945 0 0 443545 0 0 193545
40 0 0 0 464496 0 0 485986 0 0 235986
45 0 0 0 592828 0 0 540828 0 0 290828
50 0 0 0 756615 0 0 622869 0 0 372869
</TABLE>
<PAGE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
APPENDIX B
----------
MODAL TERM PREMIUM CALCULATION
The Modal Term Premium is an estimate of the premium that will be sufficient to
cover the Premium Deduction and the Monthly Deduction for the Modal Term. It
equals the Monthly Deduction(s) during the Modal Term divided by 1 less the
Premium Deduction discounted at a rate no lower than the monthly equivalent of
the minimum annual interest rate for the Guaranteed Principal Account.
<TABLE>
<CAPTION>
Example:
<S> <C> <C>
a. Modal Term: 3 Months
b. Premium Deduction: 0.75%
c. Annual Interest Rate
Used For Discounting
Monthly Deduction(s): 5%
d. Monthly Deduction In Month 1: $100
e. Monthly Deduction In Month 2: $110
f. Monthly Deduction In Month 3: $120
g. Sum of Monthly Charges
Discounted At Monthly
Equivalent Of 5%: $328.58
h. Modal Term Premium
(g. divided by 1 less Premium
Deduction): $331.06
-------
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission (the "Commission") such supplementary and
periodic information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The Bylaws of MML Bay State provide for indemnification of directors and
officers as follows:
MML Bay State directors and officers are indemnified under its by-laws. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940 or
to the security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of MML Bay
State pursuant to the foregoing provisions, or otherwise, MML Bay State has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by MML Bay
State of expenses incurred or paid by a director, officer or controlling person
of MML Bay State in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, MML Bay State will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
MML Bay State Life Insurance Company hereby represents that fees and charges
deducted under the Variable Account Rider to the Group Universal Life Insurance
Policy Certificate described in this Registration Statement and deducted under
the Rider, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by MML Bay
State Life Insurance Company.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consists of 63 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(a) of the Investment Company Act of 1940.
The signatures.
Written consents of the following persons:
1. Coopers & Lybrand, L.L.P.
2. Actuarial consent
3. Counsel opining as to the legality of securities being registered
4. Opinion opining as to actuarial matters contained in the Registration
Statement by John Valencia, Assistant Vice President
The following exhibits:
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) (a) Resolution of the Board of Directors of MML Bay State Life
Insurance Company authorizing the establishment of the
Separate Account.*
(b) Resolution of the Board of Directors of MML Bay State Life
Insurance Company authorizing the establishment of the GVUL
Segment of MML Bay State Variable Life Separate Account I.*
(2) Not Applicable.
(3) (a) Form of Distribution Servicing Agreement between MML
Distributors, LLC, and MML Bay State.*
(b) Form of Co-Underwriting Agreement between MML Investors
Services, Inc. and MML Bay State.*
<PAGE>
(c) Form of Broker Dealer Selling Agreement.*
(4) Not Applicable.
(5) Form of Group Flexible Premium Adjustable Life Insurance
Certificate To Age 95 with Variable Rider.*
(6) Organizational documents of the Company.
(a) Certificate of Incorporation of MML Bay State**
(b) By-Laws of MML Bay State**
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Oppenheimer Variable
Account Funds.*
(b) Form of Participation Agreement with Panorama Series Fund,
Inc.*
(9) Not Applicable.
(10) (a) Form of Enrollment Form**
(b) Form of Application**
(c) Form of Variable Account Rider is included in Exhibit 1
above.
2. Opinion and Consent of Counsel as to the legality of the securities
being registered.**
3. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Opinion and consent of John Valencia opining as to actuarial matters
pertaining to the securities being registered.**
6. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
Investment Company Act of 1940.**
7. Consent of Independent Accountants.**
8. Powers of Attorney.*
<PAGE>
27. Financial Data Schedule. [to be filed after GVUL Segment of Separate
Account commences operation].
*Incorporated by reference to the Registration Statement 333-23579 filed with
the Commission on March 1997.
**Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, MML
Bay State Variable Life Separate Account I has caused this Pre-Effective
Amendment Number 1 to the Registration Statement to be signed on its behalf by
the undersigned thereunto duly authorized, all in the city of Springfield and
the Commonwealth of Massachusetts, on the 31th day of July, 1997.
MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
MML BAY STATE LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
-----------------------------
Lawrence V. Burkett, Jr., President and Chief Executive Officer
MML Bay State Life Insurance Company
- ------------------
*Richard M. Howe - On July 31, 1997, as Attorney-in-Fact pursuant to powers of
attorney previously filed.
<PAGE>
As required by the Securities Act of 1933, this Pre-Effective Amendment Number 1
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* President, Chief Executive Officer July 31, 1997
- ----------------------------- and Director
Lawrence V. Burkett, Jr.
/s/ Ann Iseley* Treasurer July 31, 1997
- --------------------------- (Chief Financial Officer)
Ann Iseley
/s/ John Miller, Jr.* Second Vice President July 31, 1997
- --------------------------- and Comptroller
John Miller, Jr. (Chief Accounting Officer)
/s/ Daniel J. Fitzgerald* Director July 31, 1997
- ---------------------------
Daniel J. Fitzgerald
/s/ Isadore Jermyn* Senior Vice President, Actuary July 31, 1997
- --------------------------- and Director
Isadore Jermyn
/s/ Paul D. Adornato* Senior Vice President - Operations July 31, 1997
- --------------------------- and Director
Paul D. Adornato
/s/ John B. Davies* Director July 31, 1997
- ---------------------------
John B. Davies
/s/ Anne Melissa Dowling* Senior Vice President - Large July 31, 1997
- --------------------------- Corporate Marketing
Anne Melissa Dowling and Director
/s/ Maureen R. Ford* Senior Vice President - Annuity July 31, 1997
- --------------------------- Marketing
Maureen R. Ford and Director
/s/ Stuart H. Reese* Senior Vice President - Investments July 31, 1997
- --------------------------- and Director
Stuart H. Reese
/s/ Thomas J. Finnegan, Jr. Secretary July 31, 1997
- --------------------------- and Director
Thomas J. Finnegan, Jr.
</TABLE>
- ----------------
*Richard M. Howe - On July 31, 1997, as Attorney-in-Fact pursuant to powers of
attorney previously filed.
<PAGE>
EXHIBIT LIST
1(6)(a) Certificate of Incorporation of MML Bay State.
1(6)(b) By-Laws of MML Bay State.
1(10)(a) Form of Enrollment Form.
1(10)(b) Form of Application
2 Opinion and Consent of Counsel as to the legality of the securities
being registered.
5 Opinion and consent of John Valencia opining as to actuarial matters
pertaining to the securities being registered.
6 Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
Investment Company Act of 1940.
7 Consent of Independent Accountants.
<PAGE>
EXHIBIT
1(6)(a)
Certificate of Incorporation of MML Bay State.
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MML BAY STATE LIFE INSURANCE COMPANY
Article I
---------
The name of the Corporation is MML Bay State Life Insurance Company.
Article II
----------
The corporation was originally incorporated under the laws of the State of
Missouri, but has elected to continue its existence through adoption of the
State of Connecticut as its corporate domicile. The date of incorporation shall
be deemed to be April 1, 1935, which was the date of its original incorporation.
Article III
-----------
The registered office of the corporation in the State of Connecticut is 140
Garden Street, Hartford, Connecticut 06154. The name of the registered agent at
that office is Joseph P. DeCresce, whose residence address is 1 Gold Street,
Hartford, Connecticut 06103.
Article IV
----------
The purpose for which the corporation is organized is to conduct the business of
life and health insurance, and to engage in any lawful act or activity for which
corporations may be organized under Section 33-645 of the Connecticut General
Statutes.
Article V
---------
The total number of shares of all classes of stock which the corporation is
authorized to issue is 25,000 shares of Common Stock of the par value of $200
each.
Article VI
----------
The personal liability of a director to the corporation or its shareholders for
monetary damages for breach of duty as a director shall be limited in amount to
the compensation received by the director for serving the corporation during the
year of the violation in question; provided, however, that this provision shall
not limit the liability of a director for any breach of duty that (1) involved a
knowing and culpable violation of law; (2) enabled the director or an associate,
as defined in Section 33-840 of the Connecticut General Statutes, to receive an
improper personal economic gain; (3) showed a lack of good faith and a conscious
disregard for the duty of the director to the corporation under circumstances in
which the director was aware that his or her conduct or omission created an
unjustifiable risk of serious injury to the corporation; (4) constituted a
sustained and unexcused pattern of inattention that amounted to an abdication of
the director's duty to the corporation; or (5) created liability under Section
33-757 of the Connecticut General Statutes.
Article VII
-----------
The business and affairs of the corporation shall be managed by its Board of
Directors.
<PAGE>
EXHIBIT
1(6)(b)
By-Laws of MML Bay State.
<PAGE>
BY-LAWS
of
MML BAY STATE LIFE INSURANCE COMPANY
ARTICLE I
CERTIFICATE OF INCORPORATION
----------------------------
AND CORPORATE SEAL
------------------
Section 1. Certificate of Incorporation. The name and purpose of the
----------------------------
corporation shall be as set forth in the Certificate of Incorporation. These By-
laws, the powers of the corporation and of its directors and shareholders, and
all matters concerning the conduct and regulation of the business and affairs of
the corporation shall be subject to such provisions in regard thereto, if any,
as are set forth in the Certificate of Incorporation. All references in these
By-laws to the Certificate of Incorporation shall mean the Certificate of
Incorporation as from time to time amended.
Section 2. Offices. The registered office of the corporation shall be
-------
located in the City of Hartford, Connecticut. The principal administrative
office of the corporation shall be located in the City of Springfield,
Massachusetts. The corporation, in addition to its registered office and its
principal office, may establish and maintain such other offices and places of
business as the Board of Directors, or such officer so authorized by the Board,
may from time to time determine.
Section 3. Corporate Seal. The corporate seal shall be in the form of a
--------------
circle and shall bear the name of the corporation and shall indicate its
formation under the laws of the State of Connecticut; provided, that the form of
such seal shall be subject to alteration from time to time by the Board of
Directors.
ARTICLE II
MEETINGS OF SHAREHOLDERS
------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of the
--------------
corporation for the election of directors and for the transaction of such other
business as may properly come before such meeting shall be held on the second
Wednesday in the month of April of each year (or the next succeeding day
thereafter not a legal holiday) or on such other date that is not a legal
holiday, in either case as may be stated in the notice of the meeting. The place
of such meeting shall be the principal administrative office of the corporation
or such other place within the United States as shall be fixed by the Board of
Directors and stated in the notice of the meeting.
Section 2. Special Meetings. A special meeting of the shareholders may be
----------------
called at any time by the President or the Board of Directors and shall be
called by the President upon the written request of ten percent of the
shareholders of record entitled to vote, such written request to state the
purpose or purposes of the meeting and to be delivered to the Secretary of the
corporation. All special meetings shall be held at the principal administrative
office of the corporation or at such other place as may be designated by the
President at a date and time to be fixed by the President, which date shall not
be later than thirty days from the date of receipt of any written request.
Section 3. Notice of Meetings. Except as otherwise required by statute, a
------------------
written notice of each meeting of shareholders, whether annual or special,
stating the place, date and hour and, if a special meeting, the purposes of the
meeting, shall be given not less than ten nor more than sixty days before the
meeting to each shareholder of record entitled to vote as of the date of said
notice, by leaving such notice with him or at his residence or usual place of
business. If mailed, such notice is deemed given when deposited in the United
States mail, postage prepaid, directed to the shareholder at his address as it
appears on the records of the corporation. All such notices shall be given by
the Secretary or by such other
<PAGE>
officer as may be designated by the President. No notice of any meeting of
shareholders need be given to a shareholder if a written waiver of notice,
executed before, during or after the meeting by such shareholder or his duly
authorized attorney is filed with the records of the meeting, or to any
shareholder who shall attend such meeting in person or by proxy otherwise than
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened, or to any shareholder with whom communication is at the time unlawful.
Unless a new record date is fixed, notice of adjournment of a meeting of
shareholders to another date, time or place need not be given if such date, time
and place are announced at such meeting prior to its adjournment.
Section 4. Quorum. At all meetings of shareholders, the shareholders
------
present, in person or by proxy, representing a majority of the shares entitled
to vote at the meeting shall be sufficient to constitute a quorum for the
transaction of business. In the absence of a quorum, any officer entitled to
preside over or act as secretary of such meeting may adjourn the meeting at such
time as he deems advisable. At any such adjourned meeting at which a quorum may
be present, any business may be transacted which might have been transacted at
the meeting as originally called.
<PAGE>
Section 5. Voting. Shareholders entitled to vote shall have one vote for
------
each share of stock and a proportionate vote for a fractional share of stock
entitled to vote held by them of record according to the records of the
corporation. The corporation shall not, directly or indirectly, vote any share
of its own stock. The vote upon any question shall be by ballot whenever
requested by any person entitled to vote but, unless such a request is made,
voting may be conducted in any way approved by the meeting. In the absence of a
higher standard required by law or these By-laws, any matter properly before a
meeting of shareholders shall be decided by a majority of the votes cast
thereon.
Section 6. Proxies. Shareholders entitled to vote may vote either in
-------
person or by proxy in writing, which proxy shall be filed with the Secretary or
other person responsible to record the proceedings of the meeting before being
voted. Unless otherwise specifically limited by its terms, such proxy shall
entitle the holder thereof to vote at any adjournment of such meeting but shall
not be valid after eleven months from its date, unless the proxy provides for a
longer period. The Secretary shall determine the validity of any proxy submitted
for use at any meeting.
Section 7. Waiver of Irregularities. Unless otherwise provided by
------------------------
statute, all informalities and irregularities in calls, notices of meetings and
in the manner of voting, form of proxy, credentials and methods of ascertaining
those present, shall be deemed waived if no objection is made thereto at the
meeting.
Section 8. Informal Action by Shareholders. So far as permitted by
-------------------------------
applicable law, any action required or permitted to be taken at any meeting of
shareholders may be taken without a meeting if a written consent setting forth
such action is signed by all the shareholders entitled to vote thereon and such
written consent is filed with the records of the corporation.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. General Powers and Qualifications. The property, affairs and
---------------------------------
business of the corporation shall be managed by the Board of Directors, except
as reserved to the shareholders by law, the Certificate of Incorporation or
these By-laws. In particular, and without limiting the generality of the
foregoing, the Board shall annually determine the divisible surplus of the
corporation and the distribution thereof and it shall make such rules and
regulations as it shall deem necessary or convenient for the proper conduct of
the business and affairs of the corporation. The Board may (a) issue all or from
time to time any part of the unissued capital stock of the corporation
<PAGE>
authorized under the Certificate of Incorporation; and (b) determine, subject to
any requirement of law or the Certificate of Incorporation, the consideration
(not less than par value for shares having par value) for which stock is to be
issued and the manner of allocating such consideration between capital and
surplus.
Section 2. Number, Election and Term of Office. The Board of Directors
-----------------------------------
shall be composed of not less than three nor more than fifteen directors, with
the number of directors to be fixed from time to time by a vote of a majority of
the Board of Directors. Subject to the provisions of Section 7 of this Article
III, the directors shall be elected annually by the shareholders entitled to
vote at the annual meeting of shareholders, by a plurality of the votes at such
election. No director need be a shareholder. Each director, whether elected at
an annual meeting or pursuant to Section 7 of this Article III, shall continue
in office until the annual meeting of shareholders next held after his election
and until his successor shall have been elected and qualified, or until his
death, resignation or removal in the manner hereinafter provided.
Section 3. Meetings. An annual meeting of the Board of Directors for the
--------
election of officers and for the transaction of such other business as may
properly come before the meeting shall be held upon the notice hereinafter
provided for a special meeting. The directors, however, may hold such meeting,
without notice, at the place where the annual meeting of shareholders is held,
immediately following such meeting. The Board of Directors by resolution may
provide for the holding of regular meetings, with or without notice, and may fix
the times and places, within or without the State of Connecticut, at which such
meetings shall be held.
Special meetings of the Board of Directors may be called by the President
and shall be called by the President upon receipt of a written request of not
less than two directors. All special meetings shall be held at a date, time and
place to be fixed by the President, and the President shall direct the Secretary
(a) to give notice of each special meeting to each director mailed to him at his
address as it appears upon the records of the corporation at least five days
before the day on which the meeting is to be held or (b) to give notice to him
in person or by telephone at least two days before such meeting. Such notice
shall state the time and place of the meeting, but unless otherwise required by
statute, the Certificate of Incorporation or these By-laws, need not state the
purpose thereof. Notice of a meeting need not be given to any director if a
written waiver of notice, executed by him before, during or after the meeting,
is filed with the records of the meeting.
Section 4. Quorum. A majority of the full Board of Directors shall
------
constitute a quorum for the transaction of business. When a quorum is present at
any meeting, a majority of the directors present may take any action except as
otherwise expressly required by law, the Certificate of Incorporation or these
By-laws. In the absence of a quorum, a majority of the directors present at the
time and place of any meeting, may adjourn such meeting from time to time until
a quorum be present. If by reason of one or more vacancies there is less than
the minimum number of directors, the Board of Directors shall have the power to
function legally prior to the filling of the vacancy; provided, however, that
there shall always be a quorum.
Section 5. Chairman. The Board of Directors may elect a Chairman from
--------
among its members. The Chairman, if one is elected, shall preside at all
meetings of the Board of Directors and shall have such other powers and duties
as may be granted or assigned to him from time to time by the Board of
Directors. If a Chairman is elected but is absent or unable to preside at
meetings of the Board of Directors, or if no Chairman is elected, the President
shall preside at such meetings.
Section 6. Resignation and Removal. Any director may resign at any time
-----------------------
by giving written notice of such resignation to either the Board of Directors,
the Chairman or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon receipt. Any director may be removed either
with or without cause at any time by the affirmative vote of the shareholders of
record holding a majority of the outstanding shares of the corporation entitled
to vote for the election of directors, given at a meeting of the shareholders
called for that purpose.
<PAGE>
Section 7. Vacancies. A vacancy in the Board of Directors arising by
---------
reason of death, resignation, removal, increase in the number of directors or
otherwise, which may occur between annual meetings of the shareholders of the
corporation, may be filled by a majority vote of the remaining directors,
although less than a quorum. Any such vacancy may also be filled by the
shareholders entitled to vote for the election of directors at any meeting held
during the existence of such vacancy.
Section 8. Compensation. Directors, as such, shall not be compensated for
------------
their services, but by resolution of the Board of Directors may be paid a fee
for attendance at each meeting of the Board of Directors or a committee thereof.
Nothing herein contained shall prevent any director from serving the corporation
in any other capacity or receiving compensation therefor.
Section 9. Informal Action by Directors. So far as permitted by
----------------------------
applicable law, any action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting if a written consent
setting forth such action is signed by all the directors and such written
consent is filed with the records of the corporation.
Section 10. Committees. The Board of Directors, by the affirmative vote of
----------
a majority of the Board, may appoint from its members such committees as it may
deem advisable. Each committee shall have two or more members who shall serve at
the pleasure of the Board of Directors. A majority of the designated committee
members shall constitute a quorum for the transaction of business by such
committee. When a quorum is present at any committee meeting, a majority of the
committee members may take any action in respect of that committee except as
otherwise expressly required by law, the Certificate of Incorporation or these
By-laws.
<PAGE>
Section 11. Informal Action by Committees. So far as permitted by
-----------------------------
applicable law, any action required or permitted to be taken at any meeting of a
committee appointed by the Board of Directors may be taken without a meeting if
a written consent setting forth such action is signed by all the members of such
committee and such written consent is filed with the records of the corporation.
ARTICLE IV
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be a President,
------
a Secretary and a Treasurer, and such other officers as may be elected or
appointed in accordance with the provisions of Section 3 of this Article IV. So
far as permitted by applicable law, any two or more offices may be held by the
same person.
Section 2. Election, Term of Office and Qualifications. The President,
-------------------------------------------
the Treasurer and the Secretary shall be elected annually by the directors at
their first meeting following the annual meeting of shareholders, by vote of a
majority of the directors present and voting. The President shall be and remain
a director. No other officer need be a director.
Except as otherwise provided by law, the Certificate of Incorporation or
these By-laws, the President, the Treasurer and the Secretary shall hold office
until the first meeting of the directors following the next annual meeting of
shareholders and their respective successors are chosen and qualified, or, in
each case, until he sooner dies, resigns or is removed, unless a shorter period
shall have been specified by the terms of his election.
Section 3. Other Officers. The Board of Directors from time to time may
--------------
elect or appoint other officers or agents, including but not limited to one or
more vice-presidents, one or more assistant treasurers and one or more assistant
secretaries, each of whom shall hold office for such period, have such authority
and perform such duties as are provided in these By-laws or as the Board of
Directors from time to time may determine. The Board of Directors may delegate
to any officer or committee the power to appoint any such other officers or
agents and to prescribe their respective authority and duties.
Section 4. The President. The President shall, subject to the control of
-------------
the Board of Directors, have general charge of the business, affairs and
property of the corporation, and control over its several officers. The
President shall do and perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-laws or by the
Board of Directors.
<PAGE>
Section 5. The Treasurer. Subject to the order of the Board of Directors,
-------------
the Treasurer shall have supervision over the funds, receipts and disbursements
of the corporation. He shall cause all monies and other valuable effects to be
deposited in the name and to the credit of the corporation, in such banks, trust
companies or other depositories as shall be selected by the Board of Directors
or which he shall select pursuant to authority conferred upon him by the Board
of Directors. He shall cause the funds of the corporation to be disbursed by
checks or drafts upon the authorized depositories of the corporation drawn
pursuant to authority conferred upon him by the Board of Directors and shall
cause to be taken and preserved proper vouchers for all monies disbursed. He
shall cause to be kept at the principal administrative office of the corporation
correct books of account of its business and transactions and shall render to
the President or Board of Directors, whenever requested, an account of the
financial condition of the corporation and of his transactions as Treasurer. He
shall be empowered, from time to time, to require of the officers or agents of
the corporation reports or statements giving such information as he may desire
with respect to any and all financial transactions of the corporation, and shall
have such other powers and duties as from time may be assigned to him by these
By-laws or by the Board of Directors or the President.
Section 6. The Secretary. The Secretary shall keep and record all the
-------------
minutes of the meetings of shareholders and the Board of Directors in books to
be maintained for that purpose. He shall give notice of meetings to each member
of the Board of Directors in accordance with the provisions of these By-laws or
as required by statute. He shall be custodian of the records of the Board of
Directors. He shall keep the seal of the corporation and shall see that the seal
is affixed to all documents the execution of which, on behalf of the corporation
under its seal, shall have been duly authorized or required. He shall see that
all corporate records required by law to be kept or filed are properly kept or
filed. He shall perform all duties and shall have all powers incident to the
office of the Secretary, and shall perform such other duties and have such other
powers as from time to time may be assigned to him by these By-laws or by the
Board of Directors or the President.
Section 7. Chief Actuary. A chief actuary, if appointed or elected by the
-------------
Board of Directors, shall have charge of all calculations relating to policies
issued by the corporation, including reserves or liabilities thereunder, and of
constructing mathematical tables for use by the corporation and the preparation
of data for submission to the Board of Directors relating to surplus funds of
the corporation and the distribution thereof. The chief actuary shall perform
such other duties and shall have such powers as may be assigned to him from time
to time by the Board of Directors or the President.
Section 8. Chief Legal Officer. A chief legal officer, if appointed or
-------------------
elected by the Board of Directors, shall have charge of the legal affairs of the
corporation and shall have such other duties and such powers as may be assigned
to him from time to time by the Board of Directors or the President.
<PAGE>
Section 9. Chief Investment Officer. A chief investment officer, if
------------------------
appointed or elected by the Board of Directors, shall have such duties and such
powers as may be assigned to him from time to time by the Board of Directors or
the President.
Section 10. Comptroller. A comptroller, if appointed or elected by the
-----------
Board of Directors, shall have charge of the accounting affairs of the
corporation and shall have such other duties and such powers as may be assigned
to him from time to time by the Board of Directors or the President.
Section 11. Resignation and Removal. Any officer may resign at any time by
-----------------------
giving written notice of such resignation to the Board of Directors, the
President or the Secretary. Unless otherwise specified therein, such resignation
shall take effect upon receipt. Any officer may be removed, either with or
without cause, by vote of a majority of the total number of directors
constituting the entire Board of Directors.
Section 12. Vacancies. A vacancy in any office because of death,
---------
resignation, removal or any other cause shall be filled for the unexpired term
in the manner prescribed by these By-laws for the regular election or
appointment to such office.
Section 13. Salaries. The salaries or other compensation of the officers
--------
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director of the corporation.
ARTICLE V
INDEMNIFICATION
---------------
The corporation shall, to the fullest extent and under the circumstances
permitted by Connecticut law, as amended from time to time, indemnify any person
serving or who has served (a) as a director, officer, employee or agent of the
corporation or (b) at the corporation's request, as a director, trustee,
officer, partner, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against all
liabilities and expenses incurred by him in connection with the defense or
disposition of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether formal or
informal, while serving or thereafter, by reason of his having been such a
director, trustee, officer, partner, employee or agent, except (unless otherwise
permitted by Connecticut law) (y) in connection with a proceeding by or in the
right of the corporation in which he was adjudged liable to the corporation or
(z) in connection with any other proceeding charging improper personal benefit
to him in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
<PAGE>
Expenses, including counsel fees, reasonably incurred by any such director,
trustee, officer, partner, employee or agent who is a party to a proceeding may
be paid by the corporation in advance of the final disposition thereof upon
receipt of a written affirmation of the person's good faith belief that he has
met the standard of conduct permitting indemnification and a written undertaking
to repay the advance upon a determination that he did not meet the standard of
conduct; provided, however, that a determination is also made that on the basis
of the facts then known indemnification would not be precluded.
The right of indemnification hereby provided shall not be exclusive of or
affect any other right to which any such director, trustee, officer, partner,
employee or agent may be entitled. Nothing contained in this Article shall
affect any other right to indemnification to which such persons may be entitled
by contract or otherwise under law.
ARTICLE VI
EXECUTION OF INSTRUMENTS
------------------------
Except as the Board of Directors may generally or in particular cases authorize
the execution thereof in some other manner, all documents, instruments or
writings of any nature made, accepted or endorsed by the corporation shall be
signed, executed, verified, acknowledged and delivered by the President, a vice
president of any rank or the Secretary.
ARTICLE VII
CAPITAL STOCK
-------------
Section 1. Number of Shares; Par Value. The total number of shares and
---------------------------
the par value of all stock which the corporation is authorized to issue shall be
as stated in the Certificate of Incorporation.
Section 2. Certificates of Stock. Each shareholder shall be entitled to a
---------------------
certificate, signed by the President and by the Treasurer or Secretary,
certifying the number and class of the shares owned by him in the corporation.
Such signatures may be facsimiles. Certificates for shares of the stock of the
corporation shall be in such form as shall be approved by the Board of
Directors, and the seal of the corporation shall be affixed thereto. There shall
be entered upon the stock books of the corporation the number of each
certificate issued, the name of the person owning the shares represented
thereby, the number of shares and the date thereof.
<PAGE>
ARTICLE VIII
APPLICATIONS, POLICIES AND PREMIUMS
-----------------------------------
The President, the chief actuary, if any, and the chief legal officer, if any,
shall prescribe and approve all forms of policies issued by the corporation,
including all riders and provisions included in or attached to such policies,
and the forms of application therefor. The President and the chief actuary, if
any, shall fix all rates of premiums. The Board of Directors may determine from
time to time the maximum amount of insurance to be issued on an individual life.
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the corporation shall end on the last day of December
annually.
ARTICLE X
AMENDMENTS
----------
These By-laws may be amended or repealed by the Board of Directors, except that
the Board may take no action which by law or the Certificate of Incorporation is
required to be taken by the shareholders. Any By-law so amended or repealed by
the directors may be further altered, amended or reinstated by the shareholders
in the manner provided below.
These By-laws may be amended or repealed by a majority vote of the shareholders
present at any annual meeting or at a special meeting called for that purpose,
provided that (a) the notice of any such annual or special meeting shall specify
the subject matter of the proposed amendment or repeal and (b) any such proposed
amendment or repeal shall have been submitted in writing and filed with the
Secretary at least five days prior to such meeting. In amending or repealing any
By-law, the shareholders may provide that such By-law may not be amended or
repealed by the Board of Directors.
ARTICLE XI
EFFECTIVE DATE
--------------
These By-laws shall become effective with the redomestication of the corporation
in the State of Connecticut.
<PAGE>
EXHIBIT
1(10)(a)
Form of Enrollment Form.
15
<PAGE>
Insurance Enrollment Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<S> <C>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office:
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan Group Number
------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
1.) Employer Name:
--------------------------------------------------------------------------------------------
2.) Employer Address:
-----------------------------------------------------------------------------------------
Street & No. City State Zip Code
3.) Proposed Insured's Name (Last, First , MI):
---------------------------------------------------------------
4.) Proposed Insured's Address:
-------------------------------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.) 7.) Social Security No.
--- --- --------- -----------------------
8.) Citizenship, if not USA Type of Visa: Permanent Temporary
-------------------- ------ -----
9.) Selected Face Amount
-----------------------
10.) Variable Rider Option Yes No; If "Yes," a Supplement to Application/Enrollment Form must be
----- ------ completed.
11.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s) to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
---------------------------------------------------------------------------------------------------
b.) Secondary (optional)
--------------------------------------------------------------------------------------
c.) Tertiary (optional)
---------------------------------------------------------------------------------------
</TABLE>
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
<TABLE>
<S> <C>
12.) a.) Full Name and Address of the Owner (if not the Insured):
----------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
-----------------------
</TABLE>
Has the Proposed Insured been actively-at-work on a full-time basis during the
90 days prior to his/her participation in the plan?
<TABLE>
<S> <C>
(Disregard vacation days or absences that total less than seven days.) Yes No; If "No," explain in
---- ----- Remarks (below).
Is the Proposed Insured receiving or applying to receive disability benefits? Yes No; If "Yes," explain
---- ---- in Remarks (below).
Has the Proposed Insured smoked cigarettes in the last 12 months? Yes No; If "Yes," specify in
---- ---- Remarks (below).
Remarks:
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup withholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
withholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup withholding and he/she has not received notice from the IRS that
backup withholding has terminated, he/she should strike out language above in
(ii) that he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
<TABLE>
<S> <C>
- --------------------------------------------------------------------- -------------------------------------
Signature of Proposed Insured Date
- --------------------------------------------------------------------- -------------------------------------
Signature of Owner (if different from Proposed Insured) Date
- --------------------------------------------------------------------- -------------------------------------
Signature of Registered Representative/Agent or Authorized Enroller Date
</TABLE>
<PAGE>
Insurance Enrollment Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<S> <C>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan Group Number
------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
1.) Employer Name:
--------------------------------------------------------------------------------------------
2.) Employer Address:
-----------------------------------------------------------------------------------------
Street & No. City State Zip Code
3.) Proposed Insured's Name (Last, First , MI):
---------------------------------------------------------------
4.) Proposed Insured's Address:
-------------------------------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.) 7.) Social Security No.
--- --- --------- -----------------------
8.) Citizenship, if not USA Type of Visa: Permanent Temporary
-------------------- ------ -----
9.) Selected Face Amount
-----------------------
10.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s) to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
---------------------------------------------------------------------------------------------------
b.) Secondary (optional)
--------------------------------------------------------------------------------------
c.) Tertiary (optional)
---------------------------------------------------------------------------------------
</TABLE>
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
<TABLE>
<S> <C>
11.) a.) Full Name and Address of the Owner (if not the Insured):
----------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
-----------------------
</TABLE>
Has the Proposed Insured been actively-at-work on a full-time basis during the
90 days prior to his/her participation in the plan?
<TABLE>
<S> <C>
(Disregard vacation days or absences that total less than seven days.) Yes No; If "No," explain in
---- ----- Remarks (below).
Is the Proposed Insured receiving or applying to receive disability benefits? Yes No; If "Yes," explain
---- ---- in Remarks (below).
Has the Proposed Insured smoked cigarettes in the last 12 months? Yes No; If "Yes," specify in
---- ---- Remarks (below).
Remarks:
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup withholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
withholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup withholding and he/she has not received notice from the IRS that
backup withholding has terminated, he/she should strike out language above in
(ii) that he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
<TABLE>
<S> <C>
- --------------------------------------------------------------------- -------------------------------------
Signature of Proposed Insured Date
- --------------------------------------------------------------------- -------------------------------------
Signature of Owner (if different from Proposed Insured) Date
- --------------------------------------------------------------------- -------------------------------------
Signature of Registered Representative/Agent or Authorized Enroller Date
</TABLE>
<PAGE>
Employer or Spouse Application Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<CAPTION>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan Group Number
-------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SECTION 1
1.) Employer Name:
----------------------------------------------------------------------------------------------------------
2.) Employer Address:
-------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[_] Employee Coverage (select only one) [_] Spouse Coverage
Fill out either the Employee Information or Spouse Information section below based on box checked above:
Employee Information:
3.) Proposed Insured's Name (Last, First, MI):
------------------------------------------------------------------------------
4.) Proposed Insured's Address:
---------------------------------------------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.) 7.) Social Security No.
---- ---- --------- ------------------------------
Spouse Information:
3.a.) Spouse's Name (Last, First, MI):
---------------------------------------------------------------------------------------
3.b.) Employee's Name: (Last, First, MI):
------------------------------------------------------------------------------------
4.) Spouse's Address:
--------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
---- ---- --------
7.a.) Spouse's Social Security No. 7.b.) Employee's Social Security No.
--------------------- -----------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
8.) Citizenship, if not USA Type of Visa: Permanent Temporary
------------------------ ------ -----
9.) Selected Face Amount
------------------------
10.) Variable Rider Option Yes No; If "Yes," a Supplement to Application/Enrollment Form must be completed.
---- ----
11.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s) to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
------------------------------------------------------------------------------------------------------------------
b.) Secondary (optional)
-----------------------------------------------------------------------------------------------------
c.) Tertiary (optional)
------------------------------------------------------------------------------------------------------
If two or more persons are the beneficiaries in any class, payment shall be made equally to them or equally to the surviving
beneficiaries in that class unless otherwise requested. If percentages or fractions are indicated and any beneficiary dies
before the Proposed Insured, any share due that beneficiary will be paid proportionately to the surviving beneficiaries in
that class. If payment is made in one sum and there is no beneficiary entitled to payment when the Proposed Insured dies and
the Proposed Insured is the Owner at that time, payment shall be made to the estate of the Proposed Insured; but if the
Proposed Insured is not the Owner, payment shall be made to the Owner.
12.) a.) Full Name and Address of the Owner (if not the Insured):
------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
------------------------------------------
13.) a.) Has the Proposed Insured been actively-at-work on a full-time basis during the 90 days prior to his/her participation
in the plan? (Disregard vacation days or absences that total less than seven days.) Yes No
If "No," explain in Remarks (below). ---- ----
b.) Is the Proposed Insured receiving or applying to receive disability benefits? Yes No
If "Yes," explain in Remarks (below). ---- ----
c.) Has the Proposed Insured smoked cigarettes in the last 12 months? Yes No
If "Yes," specify in Remarks (below). ---- ----
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
-1-
<PAGE>
SECTION II
Simplified Issue Questions
14.) Name and Address of personal physician:
-----------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
14.a.) List date and reason last consulted personal physician:
------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
15.) Name and Address of physician last consulted, if different than above:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
15.a.) List date and reason consulted physician in no. 15:
---------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Diagnosis and Treatment:
---------------------------------------------------
---------------------------------------------------------------------------
16.) Current height and weight: ft. in. lbs.
---- ---- ----
17.) Have you ever been diagnosed as having or received treatment for
any of the following: cardiovascular disorder, high blood pressure,
stroke, diabetes, Acquired Immune Deficiency Syndrome (AIDS), cancer
or tumor, psychiatric disorder, alcohol or drug abuse?
Yes No
---- ----
18.) Other than above, within the past 5 years have you had any illness,
infection, injury or surgery, physical examination, electrocardiogram,
X-Ray, or laboratory study, or been a patient in a hospital or other
medical facility?
Yes No
---- ----
19.) Have you ever requested or received a pension, benefits or payment
because of injury, sickness or disability?
Yes No
---- ----
20.) Within the past 3 years, have you flown as a pilot or crew member? If
yes, submit Aviation Supplement A3310.
Yes No
---- ----
Remarks: Include diagnosis, dates, duration, names and addresses of all
attending physicians and medical facilities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- 2 -
<PAGE>
SECTION III
Full Underwriting Questions
(Submit with completed Part 2)
<TABLE>
<S> <C> <C>
21.) Insured's net worth: $ 22.) Insured's income: $ 23.) Spouse's income: $
---------- --------- ----------
24.) Do you plan any foreign residence or travel? If "Yes," provide details below. Yes No
---- ----
25.) In the past three years, have you taken part in any avocation such as motor vehicle racing, parachute jumping, hang
gliding, skin or scuba diving? Is such activity planned? Yes No
---- ----
If "Yes," submit Avocation Supplement A3320
26.) Within the past three years have you flown as a pilot or crew member? Yes No
---- ----
If "Yes," submit Aviation Supplement A3310
27.) Amount of insurance currently applied for, or now in force, on the Proposed Insured in other companies.
If none, check here. ____________
- ------------------------------------ ------------------------------------- ---------------------------------------------
Company Name Face Amount Year of Issue
- ------------------------------------ ------------------------------------- ---------------------------------------------
- ------------------------------------ ------------------------------------- ---------------------------------------------
- ------------------------------------ ------------------------------------- ---------------------------------------------
- ------------------------------------ ------------------------------------- ---------------------------------------------
</TABLE>
28.a.) In the last three years have you been involved in a motor vehicle
accident, been charged with a "moving" violation of any motor
vehicle law or has your driver's license ever been suspended? If
"Yes," provide dates and details below.
Yes No
---- ----
28.b.) State: Operator's license number:
------------------ ------------
29.) Remarks: (give question no. & details):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Agreement and Signature
To the best of my knowledge and belief, all answers and statements are
full, complete and true and were correctly recorded before I signed my
name below.
Authorization to Obtain and Disclose Information - I have received the
Notice regarding the Medical Information Bureau, Inc. and the Fair Credit
Reporting Act. I understand that an investigative consumer report may be
made regarding my character, general reputation, personal characteristics
and mode of living, and authorize that report to be made. I hereby
authorize any licensed physician, medical practitioner, hospital, clinic,
other medical or medically related facility, insurance company, the
Medical Information Bureau, Inc., or other organization that has any
records or knowledge of me and my health, to make such information
available to the life insurance company or its reinsurers. A copy of this
authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
- 3 -
<PAGE>
Taxpayer Identification (Applies only if Proposed is Owner) - The Proposed
Insured herein certifies, under penalties of perjury, that: (i) the number
referred to in no. 7 of this Part 1B is his/her correct Taxpayer Identification
Number (or he/she is waiting for a number to be issued); and (ii) he/she is not
subject to backup withholding either because he/she has not been notified by the
Internal Revenue Service (IRS) that he/she is subject to backup withholding as a
result of a failure to report all interest or dividends, or because the IRS has
notified him/her that he/she is no longer subject to backup withholding. If the
IRS has notified the Proposed Insured that he/she is subject to backup
withholding and he/she has not received notice from the IRS that backup
withholding has terminated, he/she should strike out language above in (ii) that
he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
___________________________________ ____________________________________
Signature of Proposed Insured Signature of Soliciting Agent/
Registered Representative
Signed at _______________________________ on ___________________________________
City State Date
_______________________________________________________
Signature of Owner (if different from Proposed Insured)
-4-
<PAGE>
Notice to Insured and/or Applicant For Insurance
Thank you for applying for insurance with us. We will give your application
prompt consideration and will notify you of our action as soon as possible.
In addition to your answers on the application, we must also consider
information from other sources. These sources may include results of a physical
examination, an investigative consumer report, and reports from doctors who have
attended you or from hospitals where you have been treated.
MEDICAL INFORMATION BUREAU NOTICE - Information regarding your insurability will
be treated as confidential. We or our reinsurers may, however, make a brief
report thereon to the Medical Information Bureau, Inc. a non-profit membership
organization of life insurance companies, which operates an information exchange
on behalf of its members. If you apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply that company with the information
it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. Unless the Medical Director feels that it
is in your best interest to disclose this information to your physician, it will
be disclosed directly to you. If you question the accuracy of information in the
Bureau's file, you may contact the Bureau and seek a correction in accordance
with the procedures set forth in the federal Fair Credit Reporting Act. The
address of the Bureau's information office is Post Office Box 105, Essex
Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. We or our
reinsurers may also receive information in our file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted.
The purpose of the Bureau is to protect its member companies and their
policyholders from the costs created by people who try to hide facts about their
insurability. Information furnished by the Bureau cannot be used as a basis for
evaluating risks. However, it may be used to alert us to the possible need for
further investigation. THE BUREAU DOES NOT HAVE MEDICAL REPORTS FROM HOSPITALS
AND DOCTORS. THE INFORMATION IN ITS FILES DOES NOT SHOW WHETHER AN INSURANCE
APPLICATION WAS ACCEPTED, PLACED IN AN INCREASED PREMIUM CLASS OR DECLINED.
(This Notice is only valid where permitted by law).
FAIR CREDIT REPORTING ACT NOTICE - As previously noted, an investigative
consumer report may be made on you. It will cover information about your
insurability, including information regarding your character, general
reputation, personal characteristics and mode of living. The information may be
obtained through personal interviews with you, an adult family member, friends,
neighbors and associates. You may send us a written request for a complete and
accurate disclosure of the nature and scope of any report that is made.
If requested, we will be happy to let you know whether or not we asked for an
investigative consumer report to be made. If we did, we will also tell you the
name and address of the consumer reporting agency that furnished the report. By
contacting that agency, you may inspect and receive a copy of the report.
OUR PURPOSE - Part of our basic Company purpose is to provide insurance at the
lowest possible cost. The underwriting process is necessary both to assure this
low cost and to make sure that each policyholder contributes his or her fair
share of the cost. The procedures described above benefit you as a policyholder,
because they assist us in providing your insurance at the lowest possible cost.
<PAGE>
Employee or Spouse Application Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
To: [_] Massachusetts Mutual Life [_] MML Bay State Life
Insurance Co. Insurance Co.
Home and Principal Principal Administrative
Administrative Office: Office
Springfield, Springfield,
Massachusetts 01111-0001 Massachusetts 01111-0001
For New Life Insurance Under Employer
- - Sponsored Plan Group Number
----------------------
- --------------------------------------------------------------------------------
SECTION 1
1.) Employer Name:
--------------------------------------------------------------
2.) Employer Address:
-----------------------------------------------------------
Street & No. City State Zip Code
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[_] Employee Coverage (select only one) [_] Spouse Coverage
Fill out either the Employee Information or Spouse Information section below
based on box checked above:
Employee Information:
3.) Proposed Insured's Name (Last, First , MI):
---------------------------------
4.) Proposed Insured's Address:
-------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
------- ------- -----------------
7.) Social Security No.
--------------------------
Spouse Information:
3.a.) Spouse's Name (Last, First, MI):
------------------------------------------
3.b.) Employee's Name: (Last, First, MI):
--------------------------------------
4.) Spouse's Address:
-----------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
------ ------ -------------------
7.a.) Spouse's Social Security No.
----------------------------
7.b.) Employee's Social Security No.
----------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
8.) Citizenship, if not USA
----------------------------------------------------
Type of Visa: Permanent Temporary
----------- -----------
9.) Selected Face Amount
-------------------------------------------------------
10.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s)
to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
---------------------------------------------------------------------
b.) Secondary (optional)
--------------------------------------------------------
c.) Tertiary (optional)
---------------------------------------------------------
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
11.) a.) Full Name and Address of the Owner (if not the Insured):
---------------
- --------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
------------------------
12.) a.) Has the Proposed Insured been actively-at-work on a full-time basis
during the 90 days prior to his/her participation in the plan?
(Disregard vacation days or absences that total less than seven days.)
Yes No
----- -----
If "No," explain in Remarks (below).
b.) Is the Proposed Insured receiving or applying to receive disability
benefits?
Yes No
----- -----
If "Yes," explain in Remarks (below).
c.) Has the Proposed Insured smoked cigarettes in the last 12 months?
Yes No
----- -----
If "Yes," specify in Remarks (below).
- --------------------------------------------------------------------------------
-1-
<PAGE>
SECTION II
Simplified Issue Questions
13.) Name and Address of personal physician:
------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13.a.) List date and reason last consulted personal physician:
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14.) Name and address of physician last consulted, if different than above:
-----
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14.a.) List date and reason consulted physician in no. 14:
----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Diagnosis and Treatment:
--------------------------------------------------------
- --------------------------------------------------------------------------------
15.) Current height and weight: ft. in. lbs.
------ ------ ------
16.) Have you ever been diagnosed as having or received treatment for any of the
following: cardiovascular disorder, high blood pressure, stroke, diabetes,
Acquired Immune Deficiency Syndrome (AIDS), cancer or tumor, psychiatric
disorder, alcohol or drug abuse?
Yes No
----- -----
17.) Other than above, within the past 5 years have you had any illness,
infection, injury or surgery, physical examination, electrocardiogram, X-Ray, or
laboratory study, or been a patient in a hospital or other medical facility?
Yes No
----- -----
18.) Have you ever requested or received a pension, benefits or payment because
of injury, sickness or disability?
Yes No
----- -----
19.) Within the past 3 years, have you flown as a pilot or crew member? If yes,
submit Aviation Supplement A3310.
Yes No
----- -----
Remarks: Include diagnosis, dates, duration, names and addresses of all
attending physicians and medical facilities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE>
SECTION III
Full Underwriting Questions
(Submit with completed Part 2)
20.) Insured's net worth: $ 21.) Insured's income: $
---------------- ------------
22.) Spouse's income: $
------------------
23.) Do you plan any foreign residence or travel? Yes No
If "Yes," provide details below. ----- -----
24.) In the past three years, have you taken part in any avocation such as motor
vehicle racing, parachute jumping, hang gliding, skin or scuba diving? Is
such activity planned? Yes No
If "Yes," submit Avocation Supplement A3320. ----- -----
25.) Within the past three years have you flown as a pilot or crew member?
If "Yes," submit Aviation Supplement A3310. Yes No
----- -----
26.) Amount of insurance currently applied for, or now in force, on the Proposed
Insured in other companies. If none, check here
--------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Name Face Amount Year of Issue
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
27.a.) In the last three years have you been involved in a motor vehicle
accident, been charged with a "moving" violation of any motor vehicle law
or has your driver's license ever been suspended? If "Yes," provide dates
and details below.
Yes No
----- -----
27.b.) State: Operator's license number:
----------------- ---------------------
28.) Remarks: (give question no. & details):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agreement and Signature
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Authorization to Obtain and Disclose Information - I have received the Notice
regarding the Medical Information Bureau, Inc. and the Fair Credit Reporting
Act. I understand that an investigative consumer report may be made regarding my
character, general reputation, personal characteristics and mode of living, and
authorize that report to be made. I hereby authorize any licensed physician,
medical practitioner, hospital, clinic, other medical or medically related
facility, insurance company, the Medical Information Bureau, Inc., or other
organization that has any records or knowledge of me and my health, to make such
information available to the life insurance company or its reinsurers. A copy of
this authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
-3-
<PAGE>
Taxpayer Identification (Applies only if Proposed is Owner) - The Proposed
Insured herein certifies, under penalties of perjury, that: (i) the number
referred to in no. 7 of this Part 1B is his/her correct Taxpayer Identification
Number (or he/she is waiting for a number to be issued); and (ii) he/she is not
subject to backup withholding either because he/she has not been notified by the
Internal Revenue Service (IRS) that he/she is subject to backup withholding as a
result of a failure to report all interest or dividends, or because the IRS has
notified him/her that he/she is no longer subject to backup withholding. If the
IRS has notified the Proposed Insured that he/she is subject to backup
withholding and he/she has not received notice from the IRS that backup
withholding has terminated, he/she should strike out language above in (ii) that
he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines an confinement in
prison.
- ----------------------------------------- ----------------------------------
Signature of Proposed Insured Signature of Soliciting Agent/
Registered Representative
Signed at on
----------------------------------------------- ----------------------
City State Date
- ------------------------------------------------------
Signature of Owner (if different from Proposed Insured)
-4-
<PAGE>
SUPPLEMENT TO APPLICATION/ENROLLMENT FORM
Group Flexible Premium Adjustable Life Insurance With Variable Rider
To: [_] Massachusetts Mutual Life [_] MML Bay State Life
Insurance Co. Insurance Co.
Springfield, Massachusetts 01111-0001
Group Number Dated (Mo/Day/Yr)
--------------------------- --------------------
A minimum initial premium of $500.00 is required to activate the variable rider.
- --------------------------------------------------------------------------------
1. Owner's Name:
----------------------------------------------------------------
The Owner's Taxpayer Identification No. and address are shown on Part 1B of the
Application.
- --------------------------------------------------------------------------------
2. Net Premium Allocation (Whole percentages only. Only 8 divisions and the
Guaranteed Principal Account allowable at one time.):
<TABLE>
<S> <C> <C> <C>
MML Equity Index % Panorama Growth %
- --------- ------ ---------- ------
Oppenheimer Global Securities % Panorama Total Return %
- --------- ------ ---------- ------
Oppenheimer Capital Appreciation % Panorama Lifespan Capital Appreciation %
- --------- ------ ---------- ------
Oppenheimer Growth % Panorama Lifespan Balanced %
- --------- ------ ---------- ------
Oppenheimer Growth & Income % Panorama Lifespan Diversified Income %
- --------- ------ ---------- ------
Oppenheimer Multiple Strategies % Guaranteed Principal Account %
- --------- ------ ---------- ------
Oppenheimer High Income % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Strategic Bond % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Bond % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Money % %
- --------- ------ ---------- ------------------------------------- ------
Panorama International Equity % 100%
- --------- ------
</TABLE>
The initial net premium will be allocated to the Guaranteed Principal Account.
At the end of the Right to Return period, the account value in excess of one
billed Modal Term Premium will be allocated to the Guaranteed Principal Account
and/or the Divisions of the Separate Account as specified by the Owner.
Subsequent net premium payments attributable to the billed Modal Term Premium
will be allocated to the Guaranteed Principal Account. Any net premium amounts
other than the billed Modal Term Premium will be allocated to the Guaranteed
Principal Account and/or the Divisions of the Separate Account as specified by
the Owner.
- --------------------------------------------------------------------------------
Complete the following:
3.) Has the Owner received an Offering Memorandum or Prospectus for the
certificate(s) being applied for?
Yes No;
- ---- ----
If "Yes," give date shown on the Offering Memorandum or Prospectus:
-------------
Circle One: Offering Memorandum Prospectus (printed)
Prospectus (electronic via http:\\www.massmutual.com)
4.) Does the Owner understand that:
- The death benefit and the duration of insurance may be variable or
fixed under specified conditions? Yes No
----- -----
- The variable account value of the certificate may increase or decrease
in accordance with the experience of the Separate Account?
(there are no minimum guarantees as to the variable account value)
Yes No
----- -----
- The fixed account value of the certificate earns interest at a rate no
less than a minimum specified rate? Yes No
----- -----
5. In view of the above, does the Owner believe that this certificate will
meet his/her insurance needs and financial objectives? Yes No
----- -----
- --------------------------------------------------------------------------------
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the certificate(s) applied for to be suitable for my objectives.
- ------------------------------------------ ---------------
Signature of Owner Date
-1-
<PAGE>
The following information is required to determine if this product is suitable
for the Owner (as indicated in item 1 of page 1).
1.a.) If the Owner is not an individual, a copy of the Authorization Document
(i.e. Corporate Resolution, Trust Instrument, or Partnership Agreement) must be
supplied. Have you attached or previously provided us with this?
Yes No
----- -----
1.b.) Is the Owner:
(i) a bank, savings and loan association, insurance company, or registered
investment company?
Yes No
----- -----
(ii) an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940?
Yes No
----- -----
(iii) any other entity (whether a natural person, corporation, partnership,
trust or otherwise) with total assets of at least $50 million?
Yes No
----- -----
IF THE OWNER ANSWERED (YES) TO 1b (i), (ii) or (iii), SKIP 2 THROUGH 12.
- --------------------------------------------------------------------------------
2.) Number of Owner's Dependents:
-------------------------------------
3.) Age of Owner's Dependents:
----------------------------------------
4.) Owner's Occupation:
-----------------------------------------------
5.) Owner's Estimated Earned Annual Income: $
-------------------------
6.) Owner's Estimated Unearned Annual Income: $
-----------------------
7.) Owner's Estimated Net Worth: $
-----------------------------------
- --------------------------------------------------------------------------------
8.) Investment Objectives (check all that apply):
Tax-Exempt Income Capital Preservation Income
- ---- ---- ----
Growth Tax Reduction
- ---- ---- ---- ------------
8.a.) Risk Tolerance (check only one): High Medium Low
----- ----- -----
9.) Investment Strategy (check only one):
Growth without Risk Growth with Risk
- ---- ---- ---- -------------------
10.) Sources of Payments
Current Income Surrender or Loan on Life
- ---- ---- Insurance or Annuity
Plan Sponsor Contribution Sale of Personal Property
- ---- ---- or Real Estate
Sale of Mutual Funds Sale of Other Securities
- ---- Presently Held ---- Presently Held
Savings
- ---- ---- -----------------------------
11.) Is Owner or Owner's Employer a member of the National Association of
Securities Dealers (NASD)?
Yes No
----- -----
12.) Owner's estimated Federal Income Tax Bracket:
15% 28% 31% %
-------- -------- -------- --------
- --------------------------------------------------------------------------------
13.) Does the Owner currently own any other contracts issued by MassMutual or
its affiliates? Yes No; If "Yes," please list below.
---- -----
14.) Remarks
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the life insurance certificate(s) applied for to be suitable for my
objectives. I acknowledge that, for purposes of this transaction, I have not
received any services from MML Investors Services, Inc., in its capacity as a
registered investment adviser.
- -------------------------------- --------------
Signature of Owner Date
- --------------------------------------------------------------------------------
Attestation of Agent / Registered Representative
------------------------------------------------
The Owner of the certificate(s) applied for has been informed of the risks
involved in this investment, and I certify that I have reasonable grounds for
believing the certificate(s) to be suitable for the Owner's objectives.
- ---------------------------------------------- --------------
Signature Agent / Registered Representative Date
- ---------------------------------------------- --------------
Authorized Principal Date
-2-
<PAGE>
EXHIBIT
1(10)(b)
Form of Application
16
<PAGE>
EMPLOYER MASTER APPLICATION (Part 1A) and TEMPORARY LIFE INSURANCE
AGREEMENT
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<S> <C>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office:
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plans
</TABLE>
Employer Data
1.) Name:
- -------------------------------------------------------------------------------
2.) Business Address:
- -------------------------------------------------------------------------------
Street & No. City State Zip Code
3.) Payroll Administrator:
----------------------------------------------------
4.) Primary Contact (include telephone number):
-------------------------------
5.) Taxpayer ID No.:
----------------------------------------------------------
6.) Nature of Business:
-------------------------------------------------------
- -------------------------------------------------------------------------------
Proposed Insured Data
For each Proposed Insured, the attached census lists: Full Name, Social Security
Number, Date Of Birth, Sex and, for the first Certificate Year, Selected Face
Amount
7.) Number of Eligible Participants:
-----------------------------------
8.) Have all eligible participants been actively-at-work on a full-time basis
during the 90 days prior to their participation in the plan for the Employer or
its affiliate(s)? (disregard vacations and absences of less than 7 days)
Yes No; If "No," give detailed explanation in no. 21.
- ------ ------
9.) Are any eligible participants receiving or applying to
receive disability benefits as of the date they become
eligible to participate in the plan?
Yes No
----- -----
10.) Is every Proposed Insured a citizen of and resident
in the USA?
Yes No
----- -----
If "No," is citizenship and residence of each Proposed
Insured indicated on the census?
Yes No
----- -----
- -------------------------------------------------------------------------------
Life Insurance Data (Please check (X) on the appropriate line if you desire the
specified feature.)
11.) Variable Rider Option: Yes No
----- -----
12.) Other Electable Riders:
Waiver of Monthly Charges Rider
- -----
Accidental Death & Dismemberment (AD&D)
- -----
13.) Death Benefit Option:
Option A - Selected Face Amount
- -----
Option B - Selected Face Amount plus Account Value
- -----
-1-
<PAGE>
14.) Loan Interest Rate:
Adjustable 6% Fixed
----- -----
15.) Formula for Determining Benefit Schedule:
1 - % of Salary (Specify. Salaries must be included with census data)
-----
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2 - Flat or Class Plan (specify)
----- -------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3 - Other (specify)
----- --------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
16.) Plan Effective Date (for all certificates on Proposed Insureds listed on
attached census):
----------------------
17.) Modal Term:
a.) Annual Semi-Annual Quarterly Monthly
----- ----- ----- -----
b.) Amount of Employer additional premium (if any):
-------------------
Frequency for Employer additional premium:
Annual Semi-Annual Quarterly Monthly
----- ----- ----- -----
18.) Owner: as designated by the Proposed Insured on the Part 1B
19.) Beneficiary: as designated by the Proposed Insured on the Part 1B
20.) Will the insurance now being applied for replace or change, or is it
intended to replace or change, any insurance or annuity, in whole or in part,
issued by this or any other company? Yes No
----- -----
If "Yes," give company name, policy number, amount and plans in no. 21.
21.) Remarks:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
22.) Premium remitted with this Application $ .
---------------------
- -------------------------------------------------------------------------------
Temporary Insurance Agreement
23.) The Employer applies for temporary life insurance on the life of each
Proposed Insured listed in the attached census:
Yes No; If "No,"the following provisions of this section do not apply.
- ----- -----
24.) The effective date of the temporary insurance agreement is the latest of:
(i) The date we receive from the Employer an amount of premium not
less than one-fourth of the sum of the annual modal term premiums
for the certificates applied for;
(ii) The date this Application (Part 1A) is signed by one of our
Officers; or
-2-
<PAGE>
(iii) The date chosen by the Employer (please specify date) .
-----------
During the temporary insurance period, the amount of premium received will be
held in a suspense account.
25.) The amount of temporary insurance on the life of a Proposed Insured is:
The Selected Face Amount for the first Certificate Year, as shown
----- in the census; or
Other - (Provide formula) .
----- ------------------------------------------
In no event however, may the amount of temporary insurance be greater than our
Guaranteed Issue limits.
26.) Any temporary insurance on the life of a Proposed Insured will terminate at
the earliest of:
(i) The date the permanent life insurance applied for in this
application takes effect on the life of that Proposed Insured;
(ii) The date the Proposed Insured fails to meet any requirements to
qualify for the permanent insurance applied for;
(iii) The date 90 days after the effective date of the temporary
insurance; or
(iv) The date the Employer's written notice of termination of the
insurance is received by us at our Principal Administrative
Office.
27.) Temporary Insurance Beneficiary Designation:
------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If the temporary insurance on the life of a Proposed Insured terminates for the
reason specified above in no. 26(i), the amount of premium paid with this
Application that was allocated to the certificate on the life of that Proposed
Insured will be applied as premiums under that permanent life insurance
certificate. If the temporary insurance on the life of a Proposed Insured
terminates for any other reason, we will refund the amount of premium paid with
this Application that was allocated to the certificate on the life of that
Proposed Insured, less a mortality charge. This mortality charge will be for the
period from the effective date of the temporary insurance to, but not including,
the termination date. The mortality charge for that Proposed Insured will be
based on the amount of temporary insurance on the Proposed Insured's life, and
the term rate from the attached Table of Temporary Insurance Rates for the
Proposed Insured's age.
- --------------------------------------------------------------------------------
Acknowledgment and Signature
The person(s) signing below acknowledge and agree that:
The Application - This is part of an application for permanent life insurance.
The application includes this Part 1A and its attached census and Table of
Temporary Insurance Rates, the Part 1B (which has been or which will be
completed by the Proposed Insured), any Part 2 that may be required, and any
amendments or supplements to either Part. To the best of the knowledge and
belief of the person(s) signing below, all statements in this application are
complete and true and were truly recorded. Each person signing below adopts all
the statements made in the application and agrees to be bound by them. This
Application (Part 1A) is valid until withdrawn by the Employer by written notice
to us at our Principal Administrative Office. Withdrawal of this Application
(Part 1A) shall not necessarily affect its use with applications submitted prior
to the date we receive such notice.
-3-
<PAGE>
Our Liability - A minimum amount of premium may be paid to the agent in exchange
for temporary life insurance as discussed above in the Temporary Insurance
Agreement section. If this is done, we shall be liable only as set forth in that
Agreement. If that amount of premium is not paid, we shall have no liability
unless and until:
- The application has been approved by us at our Principal Administrative
Office; and
- The first premium has been paid during the lifetime of the
Proposed Insured; and
- The Proposed Insured is actively working during the 90 days prior to
their participation in the plan for the Employer or its affiliate(s); and
- The policy, contract or certificate of coverage has been delivered to the
person named as Owner in the certificate; and
- At the time of payment and delivery, all statements in the application
which are material to the risk are complete and true as though they were
made at that time.
If any of these conditions are not met, the policy, contract or certificate of
coverage and rider(s) applied for shall not take effect.
Authority of Agents - No agent can change the terms of this application or any
policy, contract or certificate issued by us. No agent can waive any of our
rights or requirements, or extend any time for payment.
Changes and Corrections - Any change or correction of the application will be
shown on an Amendment of Application attached to the policy, contract or
certificate. Acceptance of any policy, contract or certificate of coverage
issued shall be acceptance of any change or correction of the application we
made. However, unless otherwise indicated in this application, any correction or
change of amount, classification, plan of insurance or riders must be agreed to
in writing.
- --------------------------------------------------------------------------------
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
<TABLE>
<CAPTION>
For the Employer:
<S> <C>
- ------------------------------------------------------ ------------------------------------------------------------
Print Name and Title of Person Signature of Authorized Person
Authorized to Sign for the Employer
Signed at on
--------------------------------------------------------------- ----------------------------------
City State Date
- ----------------------------------------------------------------------------------------------------------------------------
For the Life Insurance Company specified above
(if temporary insurance applied for):
- ------------------------------------------------------ ------------------------------------------------------------
Print Name and Title of Officer Authorized Officer's Signature Date
to Sign for Life Insurance Company
- ----------------------------------------------------------------------------------------------------------------------------
Will the Insurance now being applied for replace, or change, or is it intended to replace or change, any insurance or
annuity, in whole or in part, issued by this or any other company? If "yes," I have complied with all state replacement
requirements. Yes No
----- -----
- ------------------------------------------------------ ------------------------------------------------------------
General Agent Submitting Application Signature of Soliciting Registered Representative / Agent
</TABLE>
-4-
<PAGE>
EXHIBIT
2
Opinion and Consent of Counsel as to the legality of the securities being
registered.
<PAGE>
[LETTERHEAD OF MML BAY STATE LIFE INSURANCE COMPANY APPEARS HERE]
July 25, 1997
MML Bay State Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Dear Sirs/Madame:
In my capacity as Counsel of MML Bay State Life Insurance Company (the
"Company"), I have participated in the preparation of this Pre-Effective
Amendment Number 1 to the Registration Statement on Form S-6 under the
Securities Act of 1933 of the Company's Variable Riders to Group Flexible
Premium Adjustable Life Insurance Certificate (the "Policies") and in the
registration of MML Bay State Variable Life Separate Account I under the
Investment Company Act of 1940.
I am of the following opinion:
1. MML Bay State Variable Life Separate Account I is a separate account of the
Company validly existing pursuant to the Connecticut Insurance Code and
regulations issued thereunder.
2. The assets held in MML Bay State Variable Life Separate Account I equal to
the reserves and other policy liabilities of the Policies which are supported by
MML Bay State Variable Life Separate Account I are not chargeable with
liabilities arising out of any other business the Company may conduct.
3. The Variable Rider to Group Flexible Premium Adjustable Life Insurance
Certificate, when issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable state law, are
legally issued and binding obligations of the Company in accordance with their
terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to this amendment
to the Registration Statement filed under the Securities Act of 1933.
Sincerely,
/s/ JAMES RODOLAKIS
- -------------------
James Rodolakis
Counsel
<PAGE>
EXHIBIT
5
Opinion and consent of John Valencia
opining as to actuarial matters pertaining to the securities being registered.
<PAGE>
[LETTERHEAD MML BAY STATE LIFE INSURANCE COMPANY APPEARS HERE]
July 25, 1997
MML Bay State Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Dear Sirs/Madame:
This opinion is furnished in connection with the filing by MML Bay State Life
Insurance Company (the "Company") of the Pre-Effective Amendment Number 1 to the
Registration Statement on Form S-6 (filed on or about July 25, 1997) of its
Variable Rider to Group Flexible Premium Adjustable Life Insurance Certificate
(the "Policy"). The prospectus included in the Pre-Effective Amendment Number 1
describes the Policy.
I am familiar with the above named Registration Statement and the Pre-Effective
Amendment thereto, including the exhibits.
In my opinion, the illustration of death benefits and cash values included in
the Appendix A of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Policy and the group
flexible premium adjustable life insurance certificate (the "Certificate") which
the Policy amends. The rate structure of the Policy (and the Certificate) has
not been designed so as to make the relationship between premiums and benefits,
as shown in the illustrations, appear more favorable to a prospective purchaser
of the Policy for a person age 45 than to prospective purchasers of Policies for
people at other ages or underwriting classes.
I hereby consent to the use of this opinion as an exhibit to this amendment to
Pre-Effective Amendment Number 1 to the Registration Statement filed under the
Securities Act of 1933.
Sincerely,
/s/ JOHN VALENCIA
- -----------------
John Valencia, FSA
Assistant Vice President
<PAGE>
EXHIBIT
6
Procedures Memorandum
pursuant to Rule 6e-3(T)(b)(12)(iii)
under the Investment Company Act of 1940.
<PAGE>
Description of Issuance, Transfer, and Redemption Procedures for Policies
Offered by
MML Bay State Variable Life Separate Account I
of MML Bay State Life Insurance Company
Pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940
A designated segment of MML Bay State Variable Life Separate Account I (the
"Separate Account") of MML Bay State Life Insurance Company ("MML Bay State") is
registered under the Investment Company Act of 1940 (the "1940 Act") as a unit
investment trust. Within the designated segment of the Separate Account are
sixteen Divisions. Procedures apply equally to each Division and for purposes
of this description are defined in terms of the Separate Account, except where a
discussion of both the Separate Account and the individual Division is
necessary. Each Division invests in shares of a corresponding investment
division of the MML Series Investment Fund (the "MML Trust"), the Oppenheimer
Variable Account Funds (the "Oppenheimer Trust"), and the Panorama Series Fund,
Inc. (the "Panorama Fund"), each of which is a "series" type of mutual fund
registered under the 1940 Act. The investment experience of a Division of the
Separate Account depends on the market performance of its corresponding
investment division of the MML Trust, Oppenheimer Trust, or Panorama Fund. MML
Bay State will issue a Group Flexible Premium Adjustable Life Insurance Policy
to a trust in which an employer, association, sponsoring organization or trust
("Employer") will participate. Group Flexible Premium Adjustable Life Insurance
Certificates (the "Certificates") will be issued to employees affiliated with
Employers who elect to participate in the trust. Certificate owners who wish to
participate in the Divisions offered by the Separate Account must elect the
variable rider to the Certificate (the "Variable Rider"). A "Policy" is a
Certificate to which a Variable Rider has been added. Although a Policy
provides for fixed benefits supported by MML Bay State's General Account, this
description assumes that net premiums are allocated exclusively to the Separate
Account and that all transactions involve only the Divisions of the Separate
Account, except as otherwise explicitly stated herein. MML Bay State believes
the Variable Riders, and not the Certificates, are subject to the 1940 Act.
However, in the event the Certificates, as amended by the Variable Rider, are
considered subject to the 1940 Act by virtue of the election of the Variable
Rider by Certificate owners, MML Bay State provides the following information
regarding the Policies.
1. "Public Offering Price": Purchase and Related Transactions - Section 22(d)
--------------------------------------------------------------------------
and Rule 22c-1
--------------
This section outlines Policy provisions and administrative procedures which
might be deemed to constitute, either directly or indirectly, a "purchase"
transaction. Because of the insurance nature of the Policies, the
procedures involved necessarily differ in certain significant respects from
the purchase procedures for mutual funds and annuity plans. The chief
differences revolve around the structure of the cost of insurance charges
and the insurance underwriting process. Certain Policy provisions, such as
reinstatement and loan repayment, do not result in the issuance of a Policy
but require certain payments by the Policyowner and involve a transfer of
assets supporting Policy reserves into the Separate Account.
a. Insurance Charges and Underwriting Standards
--------------------------------------------
Premium payments are not limited as to frequency and number, but there are
limitations as to amount. The minimum initial premium payable when electing
the Variable Rider is $500 which must be paid in one lump sum. While the
Policy is in force, premiums may be paid at any time before the death of
the Insured subject to certain restrictions. There are no minimum or
maximum premium payments under the Policy. However, MML Bay State has the
right to refund all or a portion of a premium paid in any year if it will
increase the amount of insurance which requires a charge under the Policy.
<PAGE>
The Policies do not terminate for failure to pay premiums since payments,
other than the initial premium, are not specifically required. Rather, if
on a Monthly Calculation Date, the Account Value less any Policy Debt is
insufficient to cover the Monthly Deduction, the Policy enters a 61-day
grace period. MML Bay State does not require underwriting prior to
issuance of the Variable Rider. However, issuance of Certificates are
subject to MML Bay State's then current guidelines regarding guaranteed
issue, simplified issue, and regular underwriting. Guaranteed issue is
only available to employees affiliated with an Employer group. For those
proposed Certificate owners subject to simplified or regular underwriting,
MML Bay State will require adequate evidence of insurability prior to
approving issuance of a Certificate. MML Bay State will not issue
Certificates which maintain a death benefit amount of less than $50,000.
Cost of insurance charges for the Certificates will not be the same for all
Certificate owners. The insurance principle of pooling and distribution of
mortality risks is based upon the assumption that each Certificate owner
pays a cost of insurance charge commensurate with the insured's mortality
risk, which is actuarially determined based on factors such as age, health,
and occupation. In the context of life insurance, a uniform mortality
charge (the "cost of insurance charge") for all insureds would discriminate
unfairly in favor of those insureds representing greater mortality risks to
the disadvantage of those representing lesser risks. Accordingly, there
will be different "prices" for each actuarial category of Certificate
owners because different costs of insurance rates will apply. While not
all Certificate owners will be subject to the same cost of insurance rates,
there will be a single "rate" for all Certificate owners in a given
actuarial category. The Certificates will be offered and sold pursuant to
MML Bay State's underwriting standards and in accordance with state
insurance laws. Such laws prohibit unfair discrimination among insureds,
but recognize that premiums must be based upon factors such as age, health,
and occupation. Tables showing the maximum cost of insurance charges will
be delivered as part of the Certificate.
b. Application and Initial Premium Processing
------------------------------------------
The Variable Riders may only be elected by Certificate owners.
Certificates are only available to individuals who are members of a group
acceptable to MML Bay State where the group sponsor such as an employer,
association, sponsoring organization or trust ("Employer") executes a
participation agreement requesting participation in a group flexible
premium adjustable life insurance policy issued by MML Bay State.
Subsequent to this agreement, the Employer will submit enrollment forms on
behalf of its employees to MML Bay State requesting individual insurance
under the group contract. Once MML Bay State approves an enrollment form,
a Certificate will be issued to the approved employee. Employees who have
been approved for issuance of Certificate may then propose the election of
the Variable Rider to the Certificate. Each individual in a group accepted
by MML Bay State is aggregated for purposes of determining Certificate
issue dates, policy dates, underwriting classification, and sales load
percentages. The group contract and the participation agreement specify
the rights and privileges of the Employer. The Policy is evidence of
coverage under the Group Contract and Individuals may exercise all rights
and privileges under the Policy through the Employer. After termination of
the employment or other relationship, an individual who has been issued the
Policy may exercise all rights and privileges directly with MML Bay State.
A Certificate owner elects the Variable Rider by completing an enrollment
form and submitting the form to MML Bay State along with the minimum
premium of $500. MML Bay State then conducts a suitability review of the
proposed enrollment. If MML Bay State determines the election of the
Variable Rider is not suitable for the Certificate owner, the minimum
premium is sent back to the Certificate owner without interest.
If the Variable Rider is issued by MML Bay State, the net premium paid is
allocated among the Divisions of the Separate Account on the date of
issuance of the Variable Rider in accordance
<PAGE>
with the allocation instructions specified by the Certificate owner in the
enrollment form, unless the Certificate has an unexpired Free Look Period.
A Free Look Period under state law provides a Certificate owner the right
to cancel the Certificate within 10 days (or longer depending upon the
state of issuance) after the Certificate has been delivered to the
Certificate owner. The election of the Variable Rider does not increase or
decrease the duration of this Free Look Period. If the Certificate owner
chooses to cancel the Certificate within the Free Look Period, a refund
will be made to the owner. The refund equals either: 1) the Account Value
plus any Premium Deduction(s) and Monthly Deduction(s) reduced by any
amounts borrowed or withdrawn; or, where required by state law, 2) all
premiums paid, reduced by any amounts borrowed or withdrawn. During the
Free Look Period, the initial net premium received by MML Bay State to
which a Variable Rider has been added will be allocated to the Guaranteed
Principal Account ("GPA"). After the Free Look Period applicable to the
Certificate has expired, the net premiums paid by the Certificate owner
will be allocated among the GPA and the Divisions of the Separate Account
in accordance with the Certificate owner's instructions.
Each individual in a group accepted by MML Bay State is aggregated for
purposes of determining Certificate issue dates, policy dates, underwriting
classification, and sales load percentages. Generally, an Employer pays
MML Bay State a premium which may cover a proposed Certificate owner prior
to the time MML Bay State receives an enrollment form from the proposed
Certificate owner. In these situations, temporary insurance is provided to
the Certificate owner during the interim period. When the enrollment form
is submitted and approved by MML Bay State, the Certificate may be
backdated to the date requested by the Employer. In no event will such
backdating exceed six months.
MML Bay State will require the Certificate to be delivered to the
employee/Certificate owner within a specific time frame after the
Certificates have been generated at MML Bay State's principal
administrative offices. This period is generally 10 days from the date the
Certificates are delivered to the Employer.
c. Premium Allocation
------------------
"Net Premiums" are credited to the Certificate as of the date the premium
payments are received by MML Bay State, with the possible exception of the
first Net Premium received from the Employer. Net Premiums are equal to
the gross premium paid minus the sales load, state premium tax charges, and
the deferred acquisition cost ("DAC") tax charges. The sales load
compensates MML Bay State for the cost of distributing and servicing the
Policies, the state premium tax charges compensates MML Bay State for
applicable state and local taxes on premiums paid for the Policy, and the
DAC tax charges compensates MML Bay State for federal taxes imposed for
deferred acquisition costs. Once the sales load for a Policy is
established, it will never change for the life of the Policy. The state
premium tax charges and the DAC tax charges may be increased or decreased
by MML Bay State to reflect changes in the applicable tax or a change in
the Policyowner's residence.
The Variable Riders are intended to be sold in the group employee benefit
market. The Employer must enter into a participation agreement with MML
Bay State in order to participate in the group flexible premium adjustable
life insurance policy issued to a trust. Subsequent to this agreement, the
Employer will send premium payments on behalf of an employee/Policyowner to
MML Bay State and the Certificates will be issued. Once the Certificates
are issued, the Certificate owner will have the ability to elect the
Variable Rider. In addition to the premium payments made by the Employer
on behalf of the employee, the Policies also allow the employee to send
premium payments directly to MML Bay State. MML Bay State will require a
certain portion of the Net Premium paid by the Employer to be allocated to
MML Bay State's GPA. Net
<PAGE>
Premiums paid by the employee/Policyowner may be allocated among the GPA
and up to eight Divisions of the Separate Account. However, the portion of
Net Premiums paid by the Employer equal to the Modal Term Premium must be
allocated to the GPA. The "Modal Term Premium" is equal to the estimated
premium amount sufficient to pay the premium deduction and monthly
deduction(s) under the Policy during one Modal Term. For example, if a
Policy has a monthly Modal Term, the Modal Term Premium would be one
estimated monthly deduction plus one estimated premium deduction. If a
Policy maintains a yearly Modal Term, the Modal Term Premium would be
twelve estimated monthly deductions plus one estimated premium deduction.
The premium deduction is equal to the sales load, state premium tax charge,
and the DAC tax charge. The monthly deduction is equal to the charge for
cost of insurance protection, administrative charge, and any charges for
the cost of any additional benefits provided by rider. The Monthly
Deduction necessary under any Policy varies by the initial death benefit,
issue age, underwriting classification, and rider(s) selected. Any Net
Premium paid by the Employer in excess of the Modal Term Premium may be
allocated to any Division of the Separate Account, subject to the
restriction that a Policyowner may not have allocations in more than eight
Divisions of the Separate Account.
A Policyowner may change the allocation of Net Premiums without charge at
any time by providing written notice to MML Bay State. The change will be
effective as of the date of receipt of the notice at MML Bay State's
principal administrative office. The Policyowner may transfer amounts
among all of the Divisions of the Separate Account and the GPA, subject to
certain restrictions, including the restriction that a Policyowner may not
have allocations in more than eight Divisions of the Separate Account.
d. Repayment of Loan
-----------------
The Policy provides a loan privilege which becomes effective six months
after the Policy date. After such effective date, loans can be made on the
Policy at any time while the Insured is living. The Policy must be
properly assigned as collateral for the loan. The loan must be repaid with
an amount equal to the original loan plus loan interest.
When a loan is made, MML Bay State will take the loan amount requested from
the Divisions of the Separate Account and the GPA in proportion to the non-
loaned account value of each on the date of the loan. Shares taken from
the Divisions are liquidated and the resulting dollar amounts are
transferred to the GPA. MML Bay State may delay the granting of any loan
attributable to the Separate Account during any period that the New York
Stock Exchange (or its successor) is closed except for normal weekend and
holiday closings, or trading is restricted, or the Securities and Exchange
Commission (or its successor) determines that an emergency exists, or the
Securities and Exchange Commission (or its successor) permits MML Bay State
to delay payment for the protection of its policy owners. The amount
equal to any outstanding Policy loans is held in the GPA and is credited
with interest at a rate which is the greater of 3% and the Policy loan rate
less a MML Bay State declared charge (currently 0.75%, guaranteed not to
exceed a maximum of 1.25%) for expenses and taxes. As long as a loan is
outstanding, a portion of the Policy's account value equal to the loan is
held in the GPA.
Policy Debt (which includes accrued interest) must not equal or exceed the
Policy's account value. If this limit is reached, MML Bay State may
terminate the Policy. The Employer elects either a fixed loan interest
rate or, where permitted, an adjustable loan interest rate to apply to the
Policies. All Certificates issued to the same group will have the same
fixed or variable loan interest rate. The fixed loan interest rate is 6%
per year. When an adjustable rate has been selected, MML Bay State sets
the rate each year that will apply for the next Policy year. The maximum
rate is based on the monthly average of the composite yield on seasoned
corporate bonds as published by Moody's Investors Service or, if it is no
longer published, a substantially similar average. The maximum rate is the
published monthly average for the calendar month
<PAGE>
ending two months before the Policy year begins, or 5%, whichever is
higher. If the maximum limit is not at least 1/2% higher than the rate in
effect for the previous year, MML Bay State will not increase the rate. If
the maximum limit is at least 1/2% lower than the rate in effect for the
previous year, MML Bay State will decrease the rate.
Interest accrues daily and becomes part of the Policy debt as it accrues.
It is due on each Policy anniversary. If not paid when due, the interest
will be added to the loan and, as part of the loan, will bear interest at
the same rate. Any interest capitalized on a Policy anniversary will be
treated the same as a new loan and will be taken from the Divisions of the
Separate Account and the GPA in proportion to the non-loaned account value
in each.
All or part of any Policy Debt may be repaid at any time while the Insured
is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the
GPA to the non-loaned portion of the GPA and the applicable Division(s) of
the Separate Account. The transfer is made in proportion to the non-loaned
value in each Division at the time of repayment. If the loan is not
repaid, MML Bay State will deduct the amount due from any amount payable
from a full surrender or upon the death of the Insured.
e. Policy Reinstatement
--------------------
For a period of five (5) years after termination, a Policyowner can request
MML Bay State reinstate the Policy during the Insured's lifetime. MML Bay
State will not reinstate the Policy if it has been returned for its Cash
Surrender Value. Before MML Bay State will reinstate the Policy, it must
receive the following: 1) a premium payment equal to the amount necessary
to produce an account value equal to 3 times the monthly deduction for the
Policy on the monthly calculation date on or next following the date of
reinstatement; 2) evidence of insurability satisfactory to MML Bay State;
and 3) where necessary, a signed acknowledgment that the Policy has become
a modified endowment contract.
If a Policy is reinstated, the death benefit amount for the reinstated
Policy will be the same as it would have been if the Policy had not
terminated.
f. Correction of Misstatement of Age
---------------------------------
If the Insured's date of birth as given in the enrollment form is not
correct, an adjustment will be made. If the adjustment is made when the
Insured dies, the Death benefit amount will reflect the amount provided by
the most recent mortality charge according to the correct age. If the
adjustment is made before the Insured dies, then future monthly deductions
under the Policy will be based on the correct age.
g. Contestability
--------------
MML Bay State will not contest the validity of a Certificate after it has
been in force during the Insured's lifetime for two years from the date of
issue. MML Bay State will not contest the validity of any increase in the
death benefit amount after such increase or rider has been in force during
the Insured's lifetime for two years from its effective date.
If the Certificate is reinstated, the amount insured cannot be contested
after the Certificate has been in force during the Insured's lifetime for
two years from the date of reinstatement. The Certificate can be contested
within the two-year period over statements made in the reinstatement
application.
h. Increase or change in Death Benefit option
------------------------------------------
<PAGE>
A Policy owner's selected death benefit amount may be increased upon
request by the Policy owner, subject to MML Bay State's then current
guidelines regarding guaranteed issue, simplified issue, and regular
underwriting. Guaranteed issue is only available to employees affiliated
with an Employer group. For those Policy owners subject to simplified or
regular underwriting, MML Bay State will require adequate evidence of
insurability prior to approving an increase in the death benefit amount. A
request for a decrease in the death benefit amount will be honored by MML
Bay State once each Policy year provided the Policy maintains a minimum
death benefit amount of $50,000.
Any requested increase in the death benefit amount will be effective on the
monthly calculation date which is on, or next follows, the later of: (i)
the date 15 days after a written request for such change has been received
and approved by MML Bay State; or (ii) the requested effective date of the
change. Any requested decrease in the death benefit amount will be
effective on the monthly calculation date which is on, or next follows, the
later of: (i) the date 15 days after a written request for such change has
been received and approved by MML Bay State; (ii) the one year period
following the effective date of the previously requested decrease; or (iii)
the requested effective date of the change.
A Policyowner may change death benefit option by written request subject to
MML Bay State's current guidelines regarding proof of insurability. The
effective date of any such change will be on the Policyowner's Policy
anniversary following the date the written request is received by MML Bay
State in good order, or if MML Bay State receives the written request
within the 15 day period prior to a Policy anniversary, the change will be
effective on the second Policy anniversary following the date of the
request. MML Bay State will honor a request for a later effective date
provided the date coincides with the Policyowner's policy anniversary.
Any increase for Policyowners no longer associated with the Employer must
be at least $5,000. No increase will be allowed after the Policy
anniversary date succeeding the Insured's 75th birthday.
2. "Redemption Procedures", Surrender and Related Transactions
-----------------------------------------------------------
The Policies provide for the payment of moneys to a Policyowner or
beneficiary upon presentation of a Policy. Generally, except for the
payments of death benefits, the imposition of cost of insurance and
administrative charges, the payee will receive a pro rata or proportionate
share of the Separate Account's assets, within the meaning of the 1940 Act,
in any transaction involving "redemption procedures." The amount received
by the payee will depend upon the particular benefit for which the Policy
is presented, including, for example, the cash surrender value or death
benefit. There are also certain Policy provisions (e.g. partial
withdrawals or the loan privilege) under which the Policy will not be
presented to MML Bay State, but which will affect the Policyowner's
benefits and may involve a transfer of the assets supporting the Policy
reserve out of the Separate Account. Any combined transactions on the same
day which counteract the effect of each other will be allowed. MML Bay
State will assume the Policyowner is aware of the possible conflicting
nature of the transactions and desires their combined result. If a
transactions is requested which MML Bay State will not allow (e.g. a
request for a decrease in death benefit which lowers the amount below the
stated minimum) MML Bay State will reject the entire transaction and not
just the portion which causes the disallowance. The Policyowner will be
informed of the rejection and will have an opportunity to give new
instructions.
a. Surrender for Cash Value
------------------------
The Policy may be surrendered for its full cash surrender value at any time
while the Insured is living. Unless a later effective date is selected,
surrender is effective on the date MML Bay State receives the Policy and a
written request in proper form at its principal administrative office.
<PAGE>
The Policy and a written request for surrender are deemed received on the
date on which they are received by mail at MML Bay State's principal
administrative office. If, however, the day on which they are received is
not a day on which the net asset value of the underlying funds in which the
Divisions of the Separate Account invest is determined (i.e. the New York
Stock Exchange is not open for trading), or if they are received other than
through the mail after a certain time (currently 4:00 p.m. New York time),
then they are deemed received on the next day the net asset value of the
underlying funds is determined. MML Bay State will normally pay the full
cash surrender value within seven days after receipt of the Policy and
written request in proper form. The full cash surrender value is the
account value less any outstanding Policy debt. Computations with respect
to the investment experience of each Division of the Separate Account will
be made at the close of any date on which the net asset value of the
underlying funds is determined. This will enable MML Bay State to pay the
cash value on surrender based on the next computed value after the
surrender request is received.
The Policy value (equal to the value of all accumulations in the Separate
Account) may increase or decrease from day to day depending on the
investment experience of the Separate Account. Calculations of the Policy
value for any given day will reflect the actual premiums paid, expenses
charged, and deductions taken. MML Bay State will deduct a charge for
sales load, premium taxes, and DAC taxes for each premium payment. The
balance (Net Premium) in excess of the Modal Term Premium is allocated to
the Separate Account in accordance with the Policyowner's instructions.
MML Bay State will also make monthly deductions from a Policy to cover the
cost of insurance protections, administrative expenses, and the cost of any
additional benefits provided by rider for the following month. The monthly
administrative charge is currently $5.25 and is guaranteed not to exceed $9
and is designed to compensate MML Bay State for administering and
maintaining the Policy. Other possible deductions from the Policy (which
occur on a Policy specific basis) include a charge for partial withdrawals,
a charge for transfers (there is currently no charge for transfers, but MML
Bay State reserves the right to charge for certain transfers in the
future), a charge for loans, and increases in face amount which require
simplified or full underwriting.
b. Charges on Partial Withdrawal
-----------------------------
After a Certificate has been in force for six months a Certificate owner
can make a withdrawal from the Certificate on any monthly calculation date
by sending a written request to MML Bay State's principal administrative
office. Any withdrawal is subject to the following: 1) the minimum amount
of a withdrawal is $500 (before deducting the withdrawal charge); 2) the
maximum amount of a withdrawal is the cash surrender value minus an amount
equal to one plus the number of monthly calculation dates remaining in the
Certificate's Modal Term multiplied by its most recent monthly deduction;
3) a withdrawal charge equal to the lesser of $25 or 2% of the total
withdrawal will be assessed against the amount withdrawn; 4) the amount of
the withdrawal will be deducted from the Policy's account value at the end
of the valuation period applicable to the monthly calculation date on which
the withdrawal is made; 5) the Policyowner must specify the GPA or the
Division(s) of the Separate Account from which the withdrawal is to be
made; 6) the withdrawal amount attributable to a Division of the Separate
Account or the GPA may not exceed the non-loaned Account Value of that
Division or GPA; 7) a withdrawal from the GPA is subject to certain
restrictions; 8) the Policy's account value will automatically be reduced
by the amount of the withdrawal; 9) the Policy's death benefit will be
reduced as needed to prevent an increase in the amount of insurance which
requires a charge, unless satisfactory evidence of insurability is provided
to MML Bay State.
c. Death Benefit
-------------
MML Bay State will pay a death benefit to the beneficiary normally within
seven days after receipt, at its principal administrative office, of the
Policy, due proof of death of the Insured, and
<PAGE>
all other requirements to make payment. MML Bay State may delay payments
under circumstances as described in the prospectus.
The death benefit amount is determined as of the date of death. All or part
of the benefit can be paid in cash or applied under one or more of our
payment options described in the prospectus. The death proceeds payable
will depend on the option in effect at the time of death. Under death
benefit option A, the death benefit is the greater of the selected face
amount in effect on the date of death or the minimum face amount in effect
on the date of death, with possible additions or deductions described
below. Under death benefit option B, the death benefit is the greater of
the sum of the selected face amount in effect on the date of death plus the
account value on the date of death, or the minimum face amount in effect on
the date of death, with possible additions or deductions described below.
The minimum face amount is equal to account value times the minimum face
amount percentage. The percentages depend upon the Insured's age and are
specified under Internal Revenue Code Section 7702(d) and are set forth in
the Policy. Added to the greater of the selected face amount or minimum
face amount is that part of any monthly deduction applicable for the period
beyond the date of death. Any policy debt outstanding on the date of death
and any monthly deduction unpaid as of the date of death are deducted from
the death benefit. MML Bay State pays interest on the death benefit from
the date of death to the date the death benefit is paid or a payment option
becomes effective.
d. Termination
-----------
The Policy will terminate if on a monthly calculation date, the account
value less any Policy debt is insufficient to cover the monthly deduction.
Thereafter, the Policy enters a 61-day grace period. MML Bay State allows
61 days to pay any premium necessary to cover the overdue monthly
deduction. An Employer (or the Policyowner if the Policyowner has
disassociated from the Employer) will receive a notice from MML Bay State
which sets forth this amount. During the grace period, the Policy remains
in force. If the payment is not made by the later of the 61 days or 30
days after MML Bay State has mailed the written notice, the Policy will
terminate and insurance coverage will cease.
e. Policy Loan
-----------
The Policy provides a loan privilege which becomes effective six months
after the Policy Date. After such effective date, loans can be made on the
Policy at any time while the Insured is living. The maximum loan is an
amount equal to; 1) 90% of the Policy's account value at the time of the
loan; less 2) any outstanding Policy debt before the new loan; less 3)
interest on the loan being made and on other outstanding loan(s) to the
Policy's next Policy anniversary date; less 4) an amount equal to one plus
the number of monthly calculation dates remaining in the Policy's Modal
Term multiplied by its most recent monthly deduction. The Policy must be
properly assigned as collateral for the loan.
The loan amount requested is taken from the Divisions of the Separate
Account and the GPA (excluding Policy debt plus an amount equal to one plus
the number of monthly calculation dates remaining in the Policy's Modal
Term multiplied by its most recent monthly deduction) in proportion to the
non-loaned account value of each on the date of the loan. Shares taken
from the Divisions of the Separate Account are liquidated and the resulting
dollar amounts are transferred to the GPA. MML Bay State may delay the
granting of any loan attributable to the GPA for up to six months. MML Bay
State may also delay the granting of any loan attributable to the Separate
Account during any period that the New York Stock Exchange (or its
successor) is closed except for normal weekend and holiday closings, or
trading is restricted, or the Securities and Exchange Commission (or its
successor) determines that an emergency exists, or the Securities and
Exchange Commission (or its successor) permits MML Bay State to delay
<PAGE>
payment for the protection of its policy owners. As long as a loan is
outstanding, a portion of the Policy's account value equal to the loan is
held in the GPA.
Policy debt (which includes accrued interest) must not equal or exceed the
account value under the Policy. If this limit is reached, MML Bay State
may terminate the Policy. In this event, MML Bay State will notify the
Employer (or Policyowner if no longer associated with the Employer) in
writing. The notice will state the amount necessary to bring the Policy
debt back within the limit. If MML Bay State does not receive a payment
within 30 days after the date it mailed the notice, the Policy terminates
without value at the end of those 30 days.
The Employer elects either a fixed loan interest rate or, where permitted,
an adjustable loan interest rate to apply to the Policy. All Certificates
issued to the same group will have the same fixed or variable loan interest
rate. Interest accrues daily and becomes part of the Policy debt as it
accrues. It is due on each Policy anniversary. If not paid when due, the
interest will be added to the loan and, as part of the loan, will bear
interest at the same rate. Any interest capitalized on a Policy
anniversary will be treated the same as a new loan and will be taken from
the Divisions of the Separate Account and the GPA in proportion to the non-
loaned account value in each.
All or part of any Policy debt may be repaid at any time while the Insured
is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the
GPA to the non-loaned portion of the GPA and the applicable Division(s) of
the Separate Account. The transfer is made in proportion to the non-loaned
value in each Division of the Separate Account at the time of repayment.
If the loan is not repaid, MML Bay State will deduct the amount due from
any amount payable from a full surrender or upon the death of the Insured.
The amount equal to any outstanding Policy loans is held in the GPA and is
credited with interest at a rate which is the greater of 3% and the Policy
loan rate less a MML Bay State declared charge (currently 0.75%, guaranteed
not to exceed a maximum of 1.25%) for expenses and taxes.
A Policy loan affects the Policy since the death benefit and cash surrender
value under a Policy are reduced by the amount of the loan. Repayment of
the loan increases the death benefit and cash surrender value under the
Policy by the amount of the repayment.
f. Transfers Among Divisions
-------------------------
All or part of a Policy's Account Value may be transferred among Divisions
by written request delivered to MML Bay State's principal administrative
office. Transfers between Divisions may be by dollar amount or by whole-
number percentage. There is no limit on the number of transfers a
Policyowner may make. MML Bay State does not currently charge a fee for
transfers in excess of six (6) during any one Policy year. However, MML
Bay State reserves the right to charge a fee not to exceed $10 per transfer
if there are more than six transfers in a Policy year. Policyowners,
however, may transfer all funds in the Separate Account to the GPA at any
time regardless of the number of transfers previously made. MML Bay State
also offers Policyowners a automated account re-balancing option as well as
an automated account value transfer option. A Policyowner may only have
one of these options active at any given point in time. All transfers
under these options during any Policy year are considered one transfer for
purposes of determining the number of transfers made by a Policyowner
during a Policy year.
Transfers from the GPA to the Separate Account are subject to certain
restrictions outlined in the prospectus. All transfers made on one
Valuation Date are considered one transfer.
g. Free Look Provisions
--------------------
<PAGE>
The Certificate owner may cancel the Certificate within 10 days (or longer
if required by state law) after the owner has received the Certificate.
The election of the Variable Rider does not increase or decrease the
duration of this Free Look Period. If the Certificate owner chooses to
cancel the Certificate within the Free Look Period, the owner must mail or
deliver the Certificate and Certificate delivery receipt (if applicable)
either to MML Bay State or to the agent who sold the Certificate or to one
of MML Bay State's agency offices. If the Certificate is canceled in this
fashion, a refund will be made to the owner. The refund equals either: 1)
the Policy account value plus any premium deduction(s) and monthly
deduction(s) reduced by any amounts borrowed or withdrawn; or, where
required by state law, 2) all premiums paid, reduced by any amounts
borrowed or withdrawn.
g. Payment Options
---------------
All or part of the death benefit or cash surrender value of a Policy may be
taken in cash or as a series of level payments. Proceeds applied will no
longer be affected by the investment experience of the Divisions or the
GPA.
To receive payments, the proceeds to be applied must be at least $2,000.
If the payments under any option are less than $20 each, MML Bay State
reserves the right to make payments at less frequent intervals or to make a
lump sum payment in satisfaction of its obligation. Payment options are
described in the prospectus and include a Fixed Amount Payment Option,
Fixed Time Payment Option, Interest Payment Option, Lifetime Payment
Option, Joint Lifetime Payment Option, and Joint Lifetime Payment Option
with Reduced Payments.
<PAGE>
EXHIBIT
7
Consent of Independent Accountants.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
We consent to the inclusion in Pre-Effective Amendment No. 1 to the Registration
Statement of MML Bay State Variable Life Separate Account I (Group Flexible
Premium Variable Life segment) on Form S-6 (Registration No. 333-23579), of our
report, which includes explanatory paragraphs relating to the use of statutory
accounting practices, which practices are no longer considered to be in
accordance with generally accepted accounting principles, and the change in our
opinion for prior years, dated February 7, 1997, on our audits of the statutory
financial statements of MML Bay State Life Insurance Company. We also consent to
the reference to our Firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
August 1, 1997
